Government Grows More Confident in Economic Recovery... Warns of Inflation and Employment Burdens for Second Month

MOEF Releases July Issue of "Recent Economic Trends (Green Book)"

June Exports Surge 70.9% on Semiconductor Boom

Consumer Prices Up 3.2%, Petroleum Prices Soar 24.7%

"Strengthening Supply Management and Stability in People's Livelihoods"

The government has diagnosed for the second consecutive month that the South Korean economy continues to recover despite the aftermath of the Middle East war. However, it also assessed that inflation and a slowdown in employment continue to burden people's livelihoods.

In the July issue of the "Recent Economic Trends" (Green Book) released on July 15, the Ministry of Economy and Finance stated, "Recently, our economy has seen robust first-quarter growth, and exports continue to rise significantly. The domestic economy, including consumption—which had stagnated due to the effects of the Middle East war—is showing signs of improvement, solidifying the overall recovery trend." The ministry added, "Due to the lingering impact of the Middle East war, inflation and a slowdown in employment continue to burden people's livelihoods."

Since removing the phrase "downside economic risks" from its official outlook in April, the Ministry of Economy and Finance has emphasized the economic recovery trend for two consecutive months. In May, it described the situation as "the economic recovery trend is continuing," whereas in July, it used the stronger phrase "the recovery trend is solidifying." However, the ministry also maintained concerns over inflation and the slowdown in employment for the second month, suggesting that despite the recovery, external uncertainties and challenges for ordinary citizens remain significant.

Following President Donald Trump's signing of a proclamation imposing a 25% tariff without exceptions on steel and aluminum products imported into the United States, and stating that tariffs on automobiles and semiconductors are also under consideration, export vehicles are waiting to be loaded at Pyeongtaek Port, Gyeonggi Province on February 13, 2025. Photo by Jinhyung Kang

In May, total industrial production decreased by 0.3% from the previous month due to sluggish manufacturing. However, retail sales increased by 0.1%, continuing the improvement in domestic demand. Production in the service sector rose by 1.3%, while facility investment fell by 0.1%.

Consumption and exports supported the recovery. In June, exports increased by 70.9% year-on-year, supported by strong performances in semiconductors, computers, and shipbuilding. Average daily exports also rose by 59.5%, reaching USD 4.54 billion. The Consumer Sentiment Index (CSI) climbed 0.5 points from the previous month to 106.6, remaining above the benchmark of 100. In contrast, the Corporate Business Survey Index (CBSI) declined: the results index fell by 1.2 points to 97.7, and the outlook index dropped by 2.4 points to 95.2.

In June, consumer prices rose by 3.2% from the same month a year ago, increasing more than in May (3.1%). Petroleum prices surged by 24.7%, and prices for agricultural, livestock, and fisheries products rose by 3.2%. The core inflation index, excluding food and energy, increased by 2.5%, while the living necessities price index rose by 3.4%, indicating continued burdens from perceived inflation.

While employment returned to growth, the quality of the recovery was limited. The number of employed people in June reached 29,154,000—an increase of 63,000 compared to the same month last year—reversing the decline of 40,000 recorded in May. However, manufacturing employment fell by 97,000 and construction by 67,000. The number of employed young people aged 15–29 also declined by 197,000, continuing its downward trend.

Regarding the global economy, the government diagnosed that moderate growth continues but uncertainty persists due to the aftermath of the Middle East war. Concerns remain over inflation and sluggish growth in major economies, while volatility in international financial markets and energy prices continues. The government stated, "We are making every effort to stabilize the supply and demand of major items and prices to minimize the impact of the Middle East war on people's livelihoods." It further announced plans to "promptly implement the 'Second Half of 2026 Economic Growth Strategy' to address postwar response strategies, boost potential growth, and tackle structural issues such as polarization."

This content was produced with the assistance of AI translation services.