South Korea saw its facility investment continue to decline as local firms were reluctant to spend capital amid concerns over external uncertainties, a state- run think tank said Thursday.
"Our export slump eased and consumption improved more or less, but investment showed continued sluggishness," the Korea Development Institute (KDI) said in its monthly report on economic conditions.
Economic indicators recently showed better picture compared with the previous month. Production in mining and manufacturing sectors grew 0.8 percent in September thanks to a rise in auto output. Growth for the service industry posted a relatively high level of 0.7 percent.
Private consumption expanded 2.5 percent in September, turning around from a 0.4 percent reduction in the previous month, but consumer confidence index came in at 98 in October, falling below the benchmark level of 100 and keeping its downward trend for five straight months.
Facility investment tumbled 8.2 percent in September, compared with a 14.2 percent plunge in August, but maintained its downward trend as domestic companies hesitated to invest in facilities amid worries about the external uncertainties such as the eurozone crisis and the possible U.S. fiscal cliff.
Exports, which account for around half of the South Korean economy, increased 1.2 percent in October, the first increase in four months, but the local currency continued to appreciate against the U.S. dollar, raising worries that local exporters may face weaker price competitiveness amid the stronger won.
Quantitative easing by central banks in major economies caused the won appreciation against the greenback, the think tank added.