S. Korean economy shows signs of slowdown amid export woes prompted by U.S. tariff measures: KDI

South Korea’s economy is showing signs of a slowdown, as reflected in a range of economic indicators across various sectors, primarily due to deteriorating export conditions amid growing concerns over a global trade war, a state-run think tank said Monday.

“The South Korean economy is facing a slowdown, as recent data suggest a marked deterioration in external conditions,” the Korea Development Institute (KDI) said in its monthly economic assessment report.

Notably, the KDI used the term “slowdown” for the first time, signaling a stronger tone than previous assessments that had referred to “downside risks” or “increasing downward pressure” on the economy.

The shift in language suggests that persistent downside risks may now be materializing into an actual downturn.

The KDI noted that, alongside a prolonged slump in the construction sector, worsening global trade conditions continue to weigh heavily on the nation’s export-driven economy.

Concerns over a global trade war have intensified as U.S. President Donald Trump continues to ramp up tariff measures against major trading partners in a bid to reduce the U.S.’ trade deficit and advance broader policy goals.

In March, South Korea’s industrial output edged up from the previous month, while, on a yearly basis, overall industrial production rose 1.3 percent.

However, the construction sector remained sluggish, with output falling 2.7 percent on-month in March, following a brief rebound in February.

In April, South Korea’s exports rose 3.7 percent on-year, marking the third consecutive monthly increase.

Despite the modest gain, the average daily export volume declined 0.6 percent compared with a year earlier, indicating weakening momentum.

Particularly, outbound shipments to the United States fell 6.8 percent on-year to US$10.6 billion, leading to a $900 million reduction in South Korea’s trade surplus with Washington. The decline was mainly attributed to weaker exports of automobiles, semiconductors and machinery.

The think tank also highlighted that sluggish domestic demand persists, further dampening both domestic and external economic sentiment.