S. Korea's economy moving out of declining phase: KDI report

By Koh Byung-joon
SEOUL, July 6 (Yonhap) -- South Korea's economy is improving after a recent
downturn as domestic demand and exports are showing signs of rebounding
"relatively fast" after suffering a steep decline amid a global recession, a
state-run think tank said Monday.

"Although the employment situation remains bleak, the Korean economy appears to
be moving away from the declining phase as rapid contractions in domestic demand
and exports are recovering relatively fast," the Korea Development Institute
(KDI) said in its monthly assessment of the nation's economic conditions.
The KDI's report comes days after the government unveiled a more cautious
assessment of the South Korean economy. On Friday, the Finance Ministry said in a
similar report that the economy still remains "sluggish," calling for the need to
maintain fiscal expansion to spur an economic recovery.
The think tank cited recently-rebounding indicators as its reason for the
positive view, echoing the market's outlook that the economy might be bottoming
out and indeed may have already hit its lowest point.
Industrial production showed "gradual improvements" in May with
seasonally-adjusted month-to-month output expanding 1.6 percent, continuing its
growth for a fifth consecutive month, according to the report.
Consumer-linked economic indicators also showed that the depression in
consumption was "mitigated relatively fast," the report noted.
The consumer goods sales index rose 1.7 percent, the first growth since last
August as consumption of automobiles and other durable products jumped.
Corporate spending seems to be rebounding from a severe contraction as well, with
the equipment investment index recording minus 13.1 percent in May, a "drastic
improvement" from a 25.6 percent decline the previous month, the report showed.
Citing trade account figures, the report noted that exports declined 11.3 percent
in June from a year earlier, decelerating from a 28.5 percent fall the previous
month.
The labor market remains "under stress," however, weighing on the nation's
economic recovery, according to the report's assessment.
In May, the number of hired workers in South Korea fell by 219,000 from a year
earlier, a larger decline compared with 188,800 jobs lost the previous month. The
nation's seasonally-adjusted jobless rate also rose 0.2 percentage points to 3.9
percent, the report showed.
kokobj@yna.co.kr
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