S.Korean economy sees consumption recover despite faltering exports

South Korean economy has recently seen private consumption recover from the Middle East Respiratory Syndrome (MERS) outbreak despite the still faltering exports, which account for about half of the economy, a report by the state- run research institute showed Tuesday.

The Korea Development Institute (KDI) said in its monthly report on economic conditions that domestic demand was back on a modest recovery track though sluggish exports led to slowdown of production in the mining and manufacturing industries.

The MERS outbreak, which peaked in June and July, drove consumers to refrain from spending money and doing outside activity, including even shopping, for fears of contagion.

The economy recovered from the MERS effect, contributing to a recovery in retail sales. But exports continued to decline for nine straight months to September when the exports declined 8.3 percent compared with a year ago.

Amid the slowing exports, production in the mining and manufacturing sectors inched up 0.3 percent in August from a year earlier. Manufacturers posted an average factory utilization rate of 74.3 percent in August, lower than an average of 76.1 percent tallied in 2014.

Retail sales, which reflect private consumption, increased 1.8 percent in August from a year earlier after rising 2.1 percent in the previous month. The sales among retailers advanced 1.9 percent in August from a month ago after growing 2 percent in July.

Consumer sentiment index (CSI), which gauges outlook among consumers over economic conditions, increased 1 point from a month earlier to 103 in September. The reading above 100 means optimists outnumbered pessimists.

The KDI noted that negative factors remained to the South Korean economy, citing the expected interest rate hike in the United States and economic slowdown in emerging markets. Endi