South Korea experienced a gradual easing of an economic downturn despite lingering external uncertainties on the back of a rebound in the production of semiconductors, a state-run think tank said Wednesday.
The assessment by the Korea Development Institute (KDI) was a little more positive compared with its outlook made a month earlier that economic uncertainties were "escalating" though exports showed signs of improvement.
"The downturn in economic activity is easing, centered around semiconductors, although external uncertainties continue to persist," the KDI said in a monthly economic assessment report.
"The contraction in exports is lessening across a majority of items, coupled with a partial rebound in semiconductor production, leading to a milder slump in the manufacturing sector," the report showed.
In September, exports fell 4.4 percent on-year to US$54.66 billion, the 12th consecutive monthly decline. But it marked the smallest on-year decline so far this year, as chip sales showed signs of recovering.
In August, the production of semiconductors jumped 8.3 percent on-year on the back of rising demand for high-performance chips, such as those for artificial intelligence servers, government data showed.
Finance Minister Choo Kyung-ho (2nd from R) visits a production line of SK hynix Inc. in Icheon, 56 kilometers southeast of Seoul, on Sept. 27, 2023, in this file photo released by his office. (PHOTO NOT FOR SALE) (Yonhap)
Finance Minister Choo Kyung-ho (2nd from R) visits a production line of SK hynix Inc. in Icheon, 56 kilometers southeast of Seoul, on Sept. 27, 2023, in this file photo released by his office. (PHOTO NOT FOR SALE) (Yonhap)
But the country is facing persistent multiple external uncertainties as the United States and other major economies continued to take an aggressive monetary tightening path and rising global oil prices have driven up inflation, the KDI said.
"Influenced by climbing oil prices, headline inflation has intensified, potentially curtailing consumer spending power," the report read.
South Korea's consumer prices logged the highest on-year increase in five months in September of 3.7 percent, though the government forecast inflationary pressure would begin to ease around October. It set this year's target at a 3.3 percent rise.
The latest analysis did not factor in the latest conflict between Israel and Palestinian militant group Hamas that began Saturday, KDI officials said.
Source: Yonhap News Agency