Korea's economy shows positive signs with production, consumption and investment increases

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Korea's economy shows positive signs with production, consumption and investment increases

Published: 29 Aug. 2025, 13:06 Updated: 31 Aug. 2025, 18:51

Audio report: written by reporters, read by AI

Workers move past stores at a street selling kitchenware in Hwanghak-dong, Jung District, central Seoul, on Aug. 28. [NEWS1]

Korea’s economy saw all three key indicators — industrial production, consumption and investment — rise in July for the first time in five months.

The seasonally adjusted index of all industry production rose 0.3 percent from June to 114.4 in July, extending a rebound after a 1.5 percent gain in June, according to Statistics Korea on Friday. Output had contracted in April and May.

Manufacturing output edged up 0.3 percent in July, driven by strong growth in electronic components, which rose 20.9 percent, and machinery equipment, which gained 6.5 percent. But automobile production fell 7.3 percent, the sharpest drop since July 2024, while semiconductor output slid 3.6 percent, also the steepest decline in a year.

“July vacations, partial strikes and an expansion of U.S. local production at electric vehicle factories after tariffs weighed on both production and exports," Statistics Korea said.

Retail sales jumped 2.5 percent, the biggest monthly increase in 29 months, supported by the government's consumer coupons distributed from July 21 and improving consumer sentiment.

Durable goods sales climbed 5.4 percent, semi-durable goods 2.7 percent and nondurable goods 1.1 percent.

Sales of communication devices and computers surged 16.8 percent thanks to Samsung’s Galaxy Z Flip and Fold 7 launches. Appliance sales rose 6.6 percent, boosted by subsidies for high-efficiency products included in the second supplementary budget.

Service output added 0.2 percent, with stronger spending on dining, beauty and fitness. Wholesale and retail trade gained 3.3 percent; accommodation and food services 2 percent; arts, sports and leisure 7.5 percent; and other personal services 8.4 percent.

Facility investment rose 7.9 percent, ending five months of declines, led by an 18.1 percent increase in transportation equipment and a 3.7 percent rise in machinery.

Visitors crowd Mangwon Market in Mapo District, western Seoul, on Aug. 26. [YONHAP]

The coincident index, which reflects current economic conditions, dipped 0.1 points, but the leading index, which signals future trends, rose 0.5 points.

Consumer confidence in August hit its highest level in seven years and seven months. Analysts said sentiment improved further after Seoul and Washington reached a trade deal on July 30.

"We will push for front-loaded execution of the supplementary budget and promote regional consumption and construction ahead of Chuseok and the Asia-Pacific Economic Cooperation (APEC) summit in October," said an official from the Ministry of Economy and Finance.

The official added that "measures to follow up on the U.S. tariff deal and compensate affected companies will be drawn up in September, and growth strategies such as an AI transition and the 30 mega innovation projects will also move forward."

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM WON [[email protected]]