The government assessed that South Korea's economic recovery is "solidifying," upgrading its tone from the previous month. However, it maintained that rising prices and slowing employment — driven by the fallout from the Middle East war — continue to weigh on household livelihoods.

Containers stacked at Pyeongtaek Port in Gyeonggi Province. [Yonhap]
Containers stacked at Pyeongtaek Port in Gyeonggi Province. [Yonhap]

The Ministry of Economy and Finance, in its July edition of the "Recent Economic Trends" report — known as the Greenbook — released Wednesday, said the South Korean economy "is showing signs of a solidifying recovery, with first-quarter growth expanding significantly, exports continuing to rise sharply, and domestic demand including consumption, which had been subdued due to the Middle East war, showing improvement."

The assessment marks a step up from the ministry's June evaluation, which said "the recovery trend is continuing, supported by strong exports and improvements in consumer and business sentiment." The upgraded outlook also aligns with the government's decision Tuesday to raise its economic growth rate forecast for this year from 2.0 percent to 3.0 percent, announced as part of its "Second-Half 2026 Economic Growth Strategy."

Key indicators supported the recovery. June exports rose 70.9 percent from a year earlier, driven by expansion in semiconductor, computer and shipbuilding exports, while the average daily export value climbed 59.5 percent to $4.54 billion.

The Consumer Composite Sentiment Index for June rose 0.5 points from the previous month to 106.6, extending its upward trend. The Composite Business Sentiment Index for all industries, however, fell 1.2 points to 97.7 in June, and the July business sentiment outlook dropped 2.4 points to 95.2.

Industrial activity was mixed. Overall production across all industries fell 0.3 percent in May from the previous month, dragged down by a decline in mining and manufacturing output, while retail sales edged up 0.1 percent. Facilities investment slipped 0.1 percent from the prior month.

Amid these developments, the government maintained its assessment that "the fallout from the Middle East war continues to burden livelihoods through rising prices and slowing employment."

Consumer prices rose 3.2 percent in June, up from 3.1 percent in May, as agricultural, livestock and fishery prices accelerated and high oil prices persisted. Agricultural, livestock and fishery prices rose 3.2 percent, while petroleum product prices surged 24.7 percent. The core index excluding food and energy climbed 2.5 percent, and the living cost index rose 3.4 percent.

The number of employed persons in June stood at 29.154 million, up 63,000 from a year earlier, reversing a decline of 40,000 the previous month. However, the employment rate for those aged 15 and older fell 0.2 percentage points year-on-year to 63.4 percent. Employment conditions remained uneven: manufacturing jobs dropped by 97,000 and youth employment among those aged 15 to 29 fell by 197,000.

On the global economy, the ministry said growth is continuing at a moderate pace but warned that the Middle East war is fueling concerns about rising prices and slowing growth in major economies, while uncertainty in international financial markets and energy prices persists.

The ministry said it would "spare no effort in managing the supply of key goods and stabilizing prices and livelihoods to minimize the impact of the Middle East war," adding that it would "push forward with speed on the Second-Half 2026 Economic Growth Strategy to address structural challenges including post-war strategy, a rebound in potential growth and polarization."


y2k@heraldcorp.com