The Korea Development Institute has assessed that the domestic economy remains subdued, mainly due to shrinking employment amid the COVID-19 pandemic, despite a rise in demand for durable goods.
In its monthly economic trends report for March released on Tuesday, the institute pointed out that exports and the consumption of durable goods have soared in recent months.
Sales of durable goods, led by passenger cars and home appliances, rose 8.3 percent on-year in December last year, and 26.4 percent in January this year, partly mitigating the general trend of lower consumption amid social distancing measures.
Exports soared 11.4 percent on-year in January, followed by a 9.5 percent growth in February, mainly on the back of semiconductor shipments.
Consumer sentiment also showed signs of recovery, with the Composite Consumer Sentiment Index standing at 97.4 in February, up by 2 points compared to the previous month.
The KDI also noted it expects the subdued consumption to gradually ease as spread of COVID-19 slows.
However, it stressed that the labor market continues to weaken.
The number of jobs in South Korea was down 628-thousand on-year in December last year, and 982-thousand jobs were lost in January, marking the steepest on-year loss since December 1998.
The KDI notes the job market is particularly bad for the service industry.
"The employment situation in South Korea is worsening amid the prolonged COVID-19 pandemic. By industry, the manufacturing sector is seeing a slight slow down of job losses, but the service industry continues to suffer from much greater losses."
Production from the service industry also remained stagnant, especially in the accommodation and food services sectors.
Kim Jae-hee, Arirang News.