S. Korea economy feared to lose recovery momentum
S. Korea economy feared to lose recovery momentum
  • Yoo, Heui-Jin
  • 승인 2017.01.10 14:35
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Due to rising uncertainties at home

SEJONG, Jan. 10 (Yonhap) -- The South Korean economy is feared to lose its recovery momentum as rising uncertainties at home and abroad created a strong drag on domestic demand, a government report said Tuesday.

"Despite a rebound in exports, the recovery momentum will likely weaken due to faltering private consumption amid continuing external and internal uncertainties," the finance ministry said in its monthly economy assessment report called the "Green Book."

The report is based on the latest economic indicators of such key factors as output, exports, consumption and corporate investment that could provide clues as to how the economy has been faring in recent months.

The report said that in recent months the production side showed some signs of gaining ground to offset a clear downturn in private consumption. Asia's fourth-largest economy saw its exports rise for two months in a row in December, marking the second straight positive monthly figure for the first time in 26 months.

Industrial output rebounded to rise 3.4 percent on-month in November from a 1.3-percent drop the previous month as strikes ended at major carmakers and the effect of the Galaxy Note 7's production termination diminished.

Construction investment also made a turnaround to gain 6.4 percent on-month in November, while facility investment expanded 5.9 percent.

However, the demand side has remained sluggish. Retail sales fell 0.2 percent in November from a month earlier, a sharp drop from a 5.5-percent jump tallied in October, due to a drop in demand for durable goods like passenger cars.

Consumer sentiment also dropped to a nearly eight-year low of 94.2 in November, with the political turmoil surrounding President Park Geun-hye having wielded a negative impact on the economy.

The financial market seems to be walking a tight rope as the U.S. central bank will likely raise its base rate three times this year.

The finance ministry said it will intensify expansionary fiscal policy this year to deal with the external and internal pressures and revive the economic momentum.

Earlier, the government announced it would spend more than 30 percent of its 400 trillion won budget earmarked for 2017 in the first quarter to pump-prime the economy from the beginning of the year.

"The government will push forward with the planned frontloading of the budget in the first quarter and speed up carrying out government-led projects," said the ministry. "We will tighten monitoring of external and internal risks and take swift action if necessary."

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