hankyoreh

By Kim Kyung-rok, staff reporter

The government has switched its economic forecast from a gradual recovery to a sluggish recovery. The reason is that the April sinking of the Sewol has affected the economy longer than expected, thus weakening its ability to recover.

“Amid a reduction of total industrial output, consumption has not fully recovered. With investment uncertain as well, the economic recovery is in a slump,” the Ministry of Strategy and Finance said in the Green Book, a monthly report on recent economic trends published on July 8. This is the first time the government has referred to an economic downturn instead of an economic recovery in eleven months, since it cited signs of an economic recovery in Aug. 2013.

The government altered its evaluation because key economic activities - including production, investment, and consumption - have contracted or shown a slow recovery trend. In May, mining and manufacturing production dropped 2.7% from the previous month due to a reduction in days worked and sluggish exports, with total industrial production falling for two consecutive months. Facility investment in May was down 1.4% per annum, as investment declined in both transportation equipment and machinery. Construction investment shrunk 6.0% over the same period.

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