Sluggish growth in South Korea's industrial output is hampering the country's overall economic recovery amid increased uncertainties, which have been further exacerbated by domestic political instability, Yonhap reported with reference to a state-run economic think tank.
"Our economy has recently seen a slowdown in industrial output growth delaying economic improvement, and heightened uncertainties have weakened economic sentiment," the Korea Development Institute (KDI) said in its monthly economic assessment report.
The think tank emphasized that economic sentiment has further deteriorated due to the domestic political situation, referring to President Yoon Suk Yeol's short-lived imposition of martial law on Dec. 3 and his subsequent impeachment.
Despite the overall slowdown, the KDI pointed out that semiconductor production and exports have remained relatively strong, with associated facility investments continuing to rise.
However, performance in the construction sector has shown persistent weakness.
According to the latest data compiled by Statistics Korea, industrial production decreased 0.4 percent from a month earlier in November, marking the third consecutive month of decline.
Despite the recent political unrest, the KDI observed that fluctuations in financial market indicators, such as foreign exchange rates, have remained limited.
However, household and corporate sentiment indices have significantly declined, compared with the situation during former President Park Geun-hye's impeachment in 2016.
A survey conducted by the Bank of Korea (BOK) showed that the composite consumer sentiment index stood at 88.4 in December, falling by the largest margin since the COVID-19 pandemic.
The Composite Business Sentiment Index, or CBSI, in all industries came to 87 for December, falling to the lowest level in more than four years, a separate BOK survey showed.
"Economic sentiment has weakened, particularly in the area of consumer consumption, expanding the downward risk," the KDI concluded.
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