Government: "Economic Recovery Strengthening Thanks to Export Boom"… Employment and Inflation Pressures Persist

Ministry of Economy and Finance Releases August "Recent Economic Trends" (Green Book)

Exports Surge by 62.8% in July Thanks to Semiconductor Boom

Youth, Manufacturing, and Construction Sectors Continue to See Declining Employment

"Focusing on Management of Key Item Supplies and Stabilizing Livelihoods"

The government has diagnosed that the trend of economic recovery is strengthening, driven by recent export growth and a rebound in domestic demand. However, it also assessed that the burden on people's livelihoods continues as employment remains sluggish in certain vulnerable sectors, such as among young people and in the manufacturing industry.

In the August edition of "Recent Economic Trends" (the Green Book), released on the 14th, the Ministry of Economy and Finance stated, "Recently, our economy has seen a significant increase in exports and improvements in domestic indicators such as consumption, reinforcing the economic recovery trend." It added, "However, the burden on households remains due to continued inflation pressures caused by high oil prices, as well as persistent employment difficulties among vulnerable groups and in certain industries."

The government has upgraded its assessment level for the third consecutive month, describing last May as a 'continuing recovery trend,' last month as a 'strengthening recovery,' and this month as a 'reinforced recovery.' This is believed to reflect the continued export boom and improvements in domestic indicators such as consumption, production, and investment.

In fact, overall industrial output in June increased by 2.3% from the previous month, driven by growth in manufacturing, services, and construction. Output in the manufacturing sector rose by 6.4%, services by 0.7%, and construction by 4.1%. Retail sales increased by 2.7%, and facility investment grew by 5.8%.

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 his announcement that tariffs on automobiles and semiconductors are also under consideration, export cars are waiting to be shipped at Pyeongtaek Port in Gyeonggi Province on February 13, 2025. Photo by Jin-Hyung Kang

Exports also continued to see strong growth, led by semiconductors, computers, and ships. Exports in July surged by 62.8% compared to the same month last year, and the average daily export value rose by 69.6% to USD 4.12 billion. The Consumer Sentiment Index (CSI) increased by 0.2 points from the previous month to 106.8. The Composite Business Survey Index (CBSI) for the entire industry rose by 0.8 points to 98.5, and the August forecast CBSI rose by 1.3 points to 96.5. The coincident index of economic indicators for June increased by 0.5 points, while the leading index climbed by 0.9 points.

Inflation remained affected by high oil prices in the wake of the Middle East conflict, but the rate of increase moderated somewhat. In July, consumer prices rose by 2.8% year-on-year, down from 3.2% in June. The inflation rate for petroleum products slowed from 24.7% in June to 15.5% in July, and the inflation rate for agricultural, livestock, and fishery products declined from 3.2% to 0.9%. However, the core inflation index, excluding food and energy, rose by 0.1 percentage point to 2.6%, and the index excluding agricultural products and petroleum rose by 0.1 percentage point to 2.5% compared to the previous month. While the slower rise in petroleum and agricultural product prices pulled down the overall consumer price inflation, upward pressure on core inflation—mainly from personal services—persisted.

In terms of employment, the number of employed people increased by a wider margin, but struggles continued in vulnerable sectors. In July, the number of employed people reached 29,136,000, an increase of 108,000 compared to the same month last year, expanding from June's increase of 63,000. On the other hand, employment in the manufacturing sector fell by 68,000 and in construction by 57,000, continuing their downward trend. Employment among young people aged 15 to 29 also decreased by 191,000. The employment rate declined by 0.1 percentage point to 63.3% compared to the previous year, while the unemployment rate rose by 0.2 percentage point to 2.6%.

Regarding the global economy, the government assessed that moderate growth continues but that uncertainties remain due to the Middle East conflict and the United States' tariff measures. Accordingly, the government stated it is focusing on managing the supply of key items and stabilizing prices and livelihoods to minimize the impact of the Middle East conflict. The government announced, "We will swiftly implement the 'Economic Growth Strategy for the Second Half of 2026' to address structural issues such as post-war response strategies, a rebound in potential growth rate, and polarization."

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