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Economy recovering from H1 downturn despite uncertainties

Published: 12 Dec. 2025, 13:07 Updated: 14 Dec. 2025, 18:17

Workers walk through a Samsung Electronics chip production plant at Pyeongtaek, Gyeonggi, in this handout picture obtained by Reuters on September 7, 2022. [REUTERS/YONHAP]

The Korean economy is recovering from a downturn in the first half of the year, supported by improved domestic demand and a solid performance in the semiconductor sector, despite uncertainties, the finance ministry said Friday.

The Ministry of Economy and Finance made the assessment in its monthly economic report, the Green Book, striking an upbeat tone by referring to an ongoing "recovery" for the third consecutive month.

"Recently, our economy has been showing signs of recovery, supported by improvements in domestic consumption and robust semiconductor-led exports, moving away from the weakness experienced in the first half of the year," the report said.

However, the ministry cautioned that uncertainties remain, pointing to continued employment difficulties in vulnerable sectors and heightened month-to-month volatility in key indicators, such as industrial output and consumption due to the extended Chuseok holiday that fell in October.

The report also cited the continued impact of U.S. tariff measures and other external risks as ongoing sources of concern.

In November, the country added 225,000 jobs, continuing an upward trend in employment this year. However, employment losses continued in the manufacturing and construction sectors, as well as among the younger population.

Industrial output fell at the sharpest pace in over five years in October, while facility investment dropped 14.1 percent on month, reversing the rebound recorded in the previous month.

Cars made for export are seen parked at a port in Pyeongtaek, Gyeonggi, on Dec. 4. [NEWS1]

Retail sales, a gauge of private consumption, increased 3.5 percent on month in October, rebounding after two consecutive months of decline.

In November, the country's exports increased 8.4 percent from a year earlier, marking the sixth consecutive month of increase on the back of strong demand for semiconductors.

Consumer prices, a key gauge of inflation, increased 2.4 percent from a year earlier last month, growing over the Bank of Korea's 2 percent target for the third consecutive month.

The ministry also warned that the global economy faces risks of slowing trade due to tariff concerns, alongside persistent volatility in international financial markets.

People pass by notices on government support programs for job seekers on a street in Mapo District, western Seoul, on Dec. 9. [NEWS1]

In late October, Seoul and Washington finalized an agreement on the details of Seoul's $350 billion investment pledge, made in exchange for lower U.S. tariffs, during summit talks between President Lee Jae Myung and U.S. President Donald Trump.

Last week, the Trump administration posted a notice on the Federal Register implementing certain tariff elements of a Korea-U.S. trade deal, including a reduced duty rate of 15 percent on Korean autos retroactive to Nov. 1.

Looking ahead, the government said it will strengthen efforts to boost domestic demand and ensure that the budget plan for next year can be executed swiftly.

It also pledged to fully support initiatives, such as an AI-centered transformation strategy, to achieve Lee's five-year economic development blueprint to build what it calls a "super-innovation economy."

Yonhap