South Korea's Economic Recovery Offset by Chip Industry Amid Manufacturing Weakness

South Korea's official think tank has stated that the country's economy remains on a recovery track, with the prosperity of the chip industry offsetting the slowdown in overall manufacturing. The Korea Development Institute (KDI) noted in its monthly economic assessment report that South Korea's exports continue to expand strongly, driven by robust demand related to artificial intelligence. In June, exports surpassed $100 billion for the first time, reaching $102.25 billion, a year-on-year increase of 70.9%, setting a new historical record. KDI indicated that although the growth rate of semiconductor export volumes has slowed, the export value remains strong, supported by continuous price increases. Driven by a surge in demand for memory chips, semiconductor export value has nearly tripled, reaching $44.82 billion, with monthly exports exceeding $40 billion for the first time. KDI pointed out that manufacturing output has slightly declined due to the slowdown in the momentum of rapid growth in semiconductors, while other sectors remain sluggish. High oil prices and the weakening of the Korean won against the dollar may continue to exert upward pressure on prices, increasing the risk of further interest rate hikes, which could hinder the recovery of consumption.