Korea’s economic conditions are showing minor signs of improvement, but the country continues to face negative external factors created largely by the eurozone debt crisis, the finance ministry said Thursday.
In its monthly report on the latest economic conditions, the Ministry of Strategy and Finance said a drop in the country’s exports due to a global economic slowdown was one of the main sources of concern for Korea.
“Our economy recently saw some improvements amid stability in employment and inflation with most major indicators, including consumption, investment and output by the service industry, also showing signs of improvement,” the report said.
“But the output of the mining industry and manufacturing industry continue to suffer from dwindling exports.”
The country saw its exports slip 6.2 percent from a year earlier in August with its imports also shrinking 9.8 percent.
“With spreading concerns over a global economic downturn sparked by the eurozone crisis and worsening consumer sentiment also hurting local consumption, domestic and external uncertainties continue to persist,” the report said.
The ministry said such uncertainties are leading to a drop in investment, which it said is an “important factor that determines the country’s long-term production capability while also playing an important role in the country’s economic growth and overcoming a crisis.”
The amount of investment made in equipment and facilities in 2011 grew only 3.7 percent from a year earlier, compared with an average 9.1 percent increase during the 1991-2000 period and 20.3 percent in the 1971-1980 period, the ministry said.
The report, called the Green Book, still pointed to improvements in main economic indicators, such as easing inflation, as a sign of stability in the local market.
The country’s consumer price index rose 1.2 percent from a year earlier in August, the lowest growth in over 12 years since May 2000, with 470,000 new jobs added to the market, pulling up the country’s employment rate to 60.3 percent.
The ministry, however, said the eurozone debt woes, along with slower-than-expected growth in China and an economic slowdown in the United States will continue to weigh down the country’s economic recovery.
“The eurozone continues to face stagnation while the growth of newly emerging economies is also weakening,” it said.
“The growth rate of the US economy in the second quarter has been revised up from 1.5 percent to 1.7 percent, but the country’s economic recovery has yet to pick up pace with its consumer and investor sentiments still showing signs of dullness.”