SEOUL, March 8 (Xinhua) -- The South Korean economy saw a continued slump on the back of export fall and fast interest rate hikes, a state-run think tank said on Wednesday.

The Korea Development Institute (KDI) said in its monthly economic report that the economy continued to be sluggish recently as domestic demand slowed amid the shrinking export.

The KDI noted that the manufacturing industry weakened due to faltering exports caused by worsened external conditions, while the effect of rate hikes gradually spread to undermine consumption and construction investment.

The country's export diminished 7.5 percent in February from a year earlier, keeping a downward trend for the fifth consecutive month. The daily average shipment tumbled 15.9 percent last month.

Affected by the export reduction, output in the mining and manufacturing industry retreated 12.7 percent in January from a year earlier. Semiconductor production plunged 33.9 percent in the month.

Domestic demand was negatively influenced by the rapid interest rate hikes from the central bank, which raised its key rate by 3.0 percentage points in steps to 3.50 percent since August 2021.

Retail sales, which reflect private consumption, reduced 2.1 percent in January from the previous month, maintaining a downward trend for the third successive month.

Facility investment declined 3.9 percent in January from a year earlier, but completed construction added 0.9 percent.

The KDI noted that the recovery of construction investment would be restricted by the sharp fall in housing starts and building permits that dropped 17.2 percent and 45.9 percent each in January from a year earlier. Enditem

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