S. Korea economy showing signs of improvement on exports: KDI

SEOUL, June 11 (Yonhap) -- The South Korean economy is showing some signs of improvement on the back of robust export data, while weak domestic demand remains a challenge, a state-run think tank said Tuesday.

"The Korean economy is showing some improvement in economic activity driven by high export growth, but domestic demand has yet to recover," the Korea Development Institute (KDI) said in a monthly economic assessment report.

"As the global economy sustains modest growth, external conditions are somewhat improving. Accordingly, semiconductor exports continue a robust recovery, and exports of other items are also showing a mild upward trend," it added.

South Korea's exports extended on-year gains to the eighth straight month in May on the back of strong shipments of semiconductors, rising 11.7 percent on-year to US$58.1 billion.

The KDI, however, said lingering monetary tightening continues to weigh down on the recovery in domestic demand.

"The high interest rate environment, including continued hikes in delinquency rates on household and individual business loans, serves as a major factor weighing on domestic demand," the think tank said.

South Korea's central bank froze its key rate for the 11th straight session in May, citing still-high inflation.

"The decline in retail sales and equipment investment continues, while construction investment shows only a slight increase," it added.

colin@yna.co.kr
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