South Korea Faces Growing Economic Challenges

The Korea Development Institute (KDI) has recently voiced concerns over the increasing downside risks to South Korea's economy. In its March edition of the "KDI Monthly Economic Trends," the institute pointed out the sluggish construction sector and deteriorating export conditions as major concerns, marking the third consecutive month of such warnings.

Construction Sector in Decline

According to the report, there has been a significant drop in construction activity, with completion rates falling by 27.3% in January compared to the same month last year. Construction orders also saw a decrease of 25.1% from the previous month, signaling a worrying trend in this vital sector of South Korea's economy.

Export Market Under Pressure

The challenges for South Korea's economy are further exacerbated by the difficulties in the export market. The prices for semiconductors, a key export, are declining, and the increase in U.S. tariffs is expected to put additional pressure on future exports to the United States, a major trading partner.

Consumer and Business Sentiment

Despite a slight improvement in the consumer sentiment index to 95.2 in February from 91.2 in January, it remains below the benchmark of 100, indicating that consumers are still cautious. The business survey index (BSI) for manufacturing improved to 65.0 in February from 62.0 in the previous months, but it still hasn't reached the levels seen last November.