Government: "Economic Downward Pressure Remains... Consumer Sentiment Improvement is a Positive Signal"

[Financial News] Amid ongoing concerns about economic slowdown, the government expressed expectations for domestic demand recovery based on some improvements in consumer indicators.
 The Ministry of Economy and Finance diagnosed in the 'Recent Economic Trends (Green Book) for July 2025' published on the 18th that "recently, our economy is experiencing delays in domestic demand recovery such as consumption and construction investment, and employment difficulties persist, especially in vulnerable sectors." It continued, "While external conditions are worsening due to U.S. tariff imposition, leading to concerns about export slowdown, downward economic pressure remains, but there are some positive signals such as improved consumer sentiment."
 This is a further softening of tone from the previous June issue, where the expression "downward economic pressure is increasing" was used, by removing the word 'increasing' and adding the expression 'positive signal'.
 In addition to some improvements in consumer sentiment indicators, there seems to be an expectation for the role of the nationwide support fund to revitalize domestic demand.
 The indicator cited by the government as a positive signal is the Consumer Confidence Sentiment Index (CCSI). The CCSI for June rose to 108.7, up 6.9 points from the previous month (101.8), showing an upward trend for four consecutive months. It exceeded the baseline (100), reflecting expectations for consumption recovery.
 The recovery of Chinese tourists also had an impact. The number of Chinese visitors to Korea in June increased by 28.8% compared to the same month last year, and domestic card approval amounts increased by 4.5% compared to a year ago. However, card approval amounts for department stores (-1.1%) and discount stores (-1.6%) decreased.
 Exports in June rebounded for the first time in two months, increasing by 4.3% compared to the same month last year. This was due to the improvement in the semiconductor market and temporary factors such as pre-demand before the expiration of the Korea-U.S. mutual tariff suspension measure on August 1.
 The average daily export amount in June was 2.85 billion dollars, an increase of 6.8% compared to the previous year.
 However, with the tariff negotiation deadline (August 1) approaching, trade risks are still ongoing. In particular, it was concerned that if the U.S.-originated tariff shock materializes without diversification of export structures in the manufacturing industry, such as automobiles and machinery, the possibility of export slowdown in the second half is high.
 Supply-side indicators remain sluggish. Total industrial production in May decreased by 1.1% compared to the previous month, recording a decline for two consecutive months. Major industries such as mining and manufacturing production decreased by -2.9%, manufacturing by -3.0%, and automobiles by -2.0%. Investment indicators such as facility investment (-7.5%) and construction investment (-3.9%) also fell together.
 The government plans to execute a supplementary budget of 31.8 trillion won as quickly as possible in response to this trend. In addition, it plans to focus the capabilities of the entire government so that the 'Livelihood Recovery Consumer Coupons', which will be applied for and distributed from the 21st, can serve as a catalyst for the recovery of domestic demand, including consumption and the local economy.
spring@fnnews.com Lee Bomi Reporter