In its September economic assessment released Monday, the KDI said the recovery remains narrowly anchored to sectors tied to the global AI build-out.
Data said that sectors including semiconductors, fabricated metals, electrical equipment and machinery lead the charge while broader consumption limps behind.
"The Korean economy continues to improve, led by sectors closely tied to AI-related investment," the institute said.
August exports surged 68.7 percent from a year earlier, driven by information and communications technology goods. Semiconductor and computer shipments jumped 216.1 percent and 431.2 percent respectively in daily-value terms as chip prices soared.
Equipment investment climbed 24.9 percent in July, fueled by a boom in semiconductor manufacturing gear.
Imports of chipmaking equipment accelerated to 96.5 percent growth in August, and domestic machinery orders pointed to sustained demand for the tools that underpin AI infrastructure, the KDI said.
Yet the prosperity has proved difficult to spread as retail sales slipped 0.8 percent in July, dragged down by declines in cars, home appliances and communications devices, as real wage growth for workers crawled to just 0.3 percent in the first half of the year.
The institute said household purchasing power had recovered only modestly, leaving consumption to improve at a gradual pace.
Consumer prices rose 3.1 percent in August, lifted mainly by base effects from telecommunications charges, while core inflation excluding food and energy quickened to 3.4 percent.
The KDI cautioned that risks remain elevated, pointing to persistent tensions in the Middle East and lingering uncertainty over U.S. trade policy, both of which continue to cloud the outlook for Korean economy.
AJP Takeaways
- The Korea Development Institute said South Korea's economy is holding its recovery on the strength of AI-related investment, with semiconductors, machinery and electrical equipment driving output while household consumption lags.
- Exports rose 68.7 percent from a year earlier in August and equipment investment climbed 24.9 percent in July, but retail sales fell 0.8 percent as first-half real wage growth reached only 0.3 percent.
- The KDI warned that Middle East tensions and uncertainty over U.S. trade policy keep downside risks elevated for an economy concentrated on a single growth engine.
Copyright ⓒ Aju Press All rights reserved.
