South Korea’s Economy Struggles

(MENAFN) The South Korean economy continues to face challenges, impacted by fragile domestic demand and increasing external uncertainties, particularly due to the US’ "aggressive" tariff policy, among other contributing factors, according to a report released Tuesday by a government-affiliated research institute.

"The Korean economy remains at a similarly subdued level as in the previous month.

Construction remains depressed, while manufacturing is experiencing a downturn, dampening production growth," noted the latest analysis by the Korea Development Institute (KDI), as reported by a news agency from Seoul.

In its monthly economic review, the KDI highlighted that although global sales of semiconductor chips remain robust, South Korea’s overall exports to the United States have weakened, especially in industries like automobiles that have been affected by the US’ aggressive tariff policy.

This has led to a slowdown in manufacturing output growth.

"While consumer sentiment is on the mend, pointing to a possible improvement in domestic demand conditions, trade-related uncertainty remains elevated with the expiry of the U.S.’ mutual tariff suspension approaching," the report added.

In June, South Korea’s exports increased by 4.3 percent compared to the previous year, reaching USD59.8 billion, driven largely by strong international demand for semiconductors.

However, exports to the US dropped by 0.5 percent to USD11.24 billion, reflecting the impact of comprehensive tariff measures introduced during the Trump administration.

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