The assessment of domestic economic activity is that the trend of recovery is being sustained, as both domestic demand and exports are maintaining their trends of modest improvement and as the expansion in government spending is also contributing to the growth momentum.
Retail sales and facilities investment declined in April, but construction investment and production indicators shifted to increases.
Exports expanded by a wider margin in May, due to the buoyancy of exports to the US and to emerging market countries such as China.
In the coming months, the Korean economy is expected to maintain its modest uptrend in line with the gradual recovery of the global economy. In terms of the future growth path, however, there are both upside risks due for instance to the possibility of an acceleration in economic growth following the Base Rate cut and execution of the supplementary budget, and downside risks for example of heightened volatility in the value of the Japanese yen and of a possibility of production setbacks caused by shortfalls in power supply.
Consumer price inflation should not accelerate to any great extent, owing to the declines in international oil and agricultural product prices, but inflation expectations are sustaining a high level well above the rate of consumer price inflation.
The current account is forecast to maintain its surplus trend.
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