South Korea's economy is showing signs of a modest recovery, despite overall economic conditions remaining weak, a state-run think tank said Monday.

In its latest report on the economy, the Korea Development Institute said that facility and construction investment have picked up from recent slowdowns on a year-on-year basis.

On top of such trends, falling oil prices and interest rate cuts are exerting a positive impact on the economy as a whole, it added.

"Production-related indicators remain sluggish, yet the economic activity composite index is improving, with consumption and facility investment all on the mend as of February," the think tanks said.

While construction investment moved up in February, the slow pace of the global economic recovery hurt overseas shipments, a key growth engine for the export-driven economy.

Other negative development concerns disappointing industrial output, the KDI said. "Average industrial production and manufacturing shipments fell in January and February from the previous year," it said.

Private consumption rebounded for non-durable goods in February, and the tally for the first two months of this year edged up a mere 1.1 percent compared to 2014, it said. The 1.1 percent gain is smaller than the 1.7 percent increase posted for the whole of last year. (Yonhap)