The government said the economy continues on a recovery path, driven by strong exports and improving consumer and corporate sentiment. At the same time, it raised concerns that the burden on people's livelihoods could grow, centered on inflation and employment, as price growth rose into the 3% range and the number of employed workers turned to decline.
In the June edition of its "Recent Economic Trends" (Green Book) released Thursday, the Ministry of Economy and Finance (MOEF) said, "Our economy recently continues on a recovery path, with strong exports and improving consumer and corporate sentiment." It added, "Amid continued uncertainty stemming from the Middle East war and other factors, there are concerns about burdens on livelihoods, including rising prices and slowing employment."
In last month's Green Book, the government said, "The economic recovery continues, with first-quarter growth expanding significantly," while assessing that "downside risks to the economy from the Middle East war persist." This month, it maintained its judgment of an economic recovery while referring more directly to the burdens of prices and employment.
In fact, consumer prices rose 3.1% last month, widening the increase from the previous month (2.6%). The living-cost price index, which is composed mainly of items consumers buy frequently and reflects perceived inflation, also rose 3.3%. Petroleum product prices climbed 24.2% due to the impact of the Middle East war and base effects. Gasoline prices stood at 2,011 won per liter and diesel at 2,006 won, both in the 2,000-won range.
The burden of service prices also grew. Personal service prices rose 3.7%, driven by increases in travel services. The dining-out service price increase was 2.6%, the same as the previous month, but service prices excluding dining out rose 4.4%. Employment indicators also worsened. The number of employed workers in May was 29.16 million, down 40,000 from a year earlier. This marked a turn to decline within a month, from an increase of 74,000 in April.
By industry, manufacturing employment fell by 140,000 and construction employment dropped by 43,000. Youth employment fell by 255,000, widening the decline. The number of unemployed reached 878,000, up 25,000 from a year earlier. The unemployment rate was 2.9%, up 0.1 percentage point from the same month last year.
Production and retail sales indicators were also weak. All-industry production in April fell 0.6% from the previous month, as mining and manufacturing, services, and construction all declined. Mining and manufacturing production fell 0.7%, services production 1.0%, and construction production 1.4%. Facility investment and retail sales each fell 3.6%.
Exports, by contrast, continued to perform strongly, led by semiconductors. May exports rose 53.2% from the same period a year earlier. Average daily exports, which take working days into account, also rose 60.7% from the same month last year to $4.28 billion. Expanded exports of semiconductors, computers, and ships drove the export increase.
Sentiment indicators also improved. The consumer sentiment index in May was 106.1, up 6.9 points from a month earlier. The all-industry business sentiment performance index was 98.9, up 4.0 points from the previous month, while the outlook index for June rose 3.7 points to 97.6.
On the global economy, the MOEF said, "It continues to grow moderately, but volatility in international financial markets and energy prices has widened due to the impact of the Middle East war." It added, "There are concerns about supply chain disruptions, expanding upward pressure on prices, and slowing growth."
"To minimize the impact of the Middle East war, we will maintain our emergency economic response system," the ministry said. "We will do our utmost to stabilize livelihoods, including the swift execution of the supplementary budget such as high oil price relief funds, supply and demand management of key items, and prices."
