The Ministry of Economy and Finance diagnosed that downward pressures on the economy due to delays in domestic demand recovery and weakened exports are still significant, and prescribed that they will prepare the supplementary budget swiftly.
In the 'Recent Economic Trends (Green Book) May issue' released on the 13th, the Ministry of Economy and Finance assessed the situation of the Korean economy, noting that "domestic recovery in consumption and construction investment is delayed, and employment difficulties persist mainly in vulnerable institutional sectors" and that "because of deterioration in external conditions due to U.S. tariffs, downward pressures on the economy, such as weakened exports, remain.
Regarding the external economic situation, it was stated that "the deterioration of the trade environment resulting from tariffs imposed by major countries raises concerns about persistent volatility in international financial markets and a slowdown in trade and growth." They added that they will push for a supplementary budget swiftly to support economic recovery, revive consumption, and aid vulnerable groups and small businesses, while responding vigorously to trade risks, including supporting our corporations impacted by U.S. tariffs.
Key economic indicators announced last month reveal the sluggish state of the Korean economy.
The main indicators of industrial activity for April showed a discernible impact of U.S. tariff barriers, resulting in simultaneous declines in industrial production, consumption, and investment sectors. Industrial production in the mining and manufacturing sector dropped by 0.9%, mainly due to a decrease in automotive production (-4.2%). The service sector (-0.1%) and construction sector (-0.7%) also contracted, leading to an overall industrial production decline of 0.8%.
In the expenditure sector, retail sales decreased by 0.9%.
Facility investment decreased by 0.4% and construction investment by 0.7%. Compared to the same month last year, these two indicators fell by 8.4% and 20.5%, respectively.
However, the government noted that there are also positive factors such as improvements in the consumer sentiment index and increased corporate sentiment performance. The consumer sentiment index (CCSI) for May rose by 8.0 points to 101.8 compared to the previous month, and the corporate sentiment index (CBSI) also rose by 2.8 points compared to the previous month.
According to employment indicators, the number of employed persons increased by 245,000 in May, and the unemployment rate dropped by 0.2 percentage points to 2.8% compared to the same month last year. The consumer price inflation rate rose by 1.9%, showing a reduction in the rate of increase.
In May, the financial market saw a rise in stock prices, an increase in government bond rates, and a decline in exchange rates. The housing market experienced a drop in transaction prices, but lease prices remained stable.