South Korea’s economy is slowing down, but its downward pace seems to be “moderating” despite the lingering eurozone debt problems, high oil prices and other cloudy global economic conditions, a state-run think tank said Wednesday.

Inflation is also showing signs of stabilizing, easing worries that higher price levels could dampen the country‘s overall economic recovery going forward, according to the Korea Development Institute.

“The Korean economy is slowing down at a moderating pace and the inflation appears to be stabilizing gradually,” the KDI said in its monthly report that assesses the country’s latest economic trends.

The report is based on the latest major economic indicators, including industrial output, exports, employment, investment and consumer spending.

South Korea‘s industrial output shrank on-year for the first time in 31 months in January, but the report took notice of its month-on-month 3.3 percent growth, a turnaround from a 0.7 percent decline in the previous month.

The think tank cited a sharply improved average factory utilization rate of 80.6 percent in January, compared with 77 percent from a month earlier. It also gave favorable scores to the current labor market conditions, mentioning the job creation of 536,000 positions reported in January.

Private spending, however, was cited as a downside factor for the economy. The think tank said that the “overall slowdown trend” for private consumption growth seems to be continuing.

On the global front, the KDI worried about the economic “sluggishness” in the euro area and “growing uncertainties” over rising international oil prices being influenced by the emerging possibility of Iran halting its oil exports.

(Yonhap News)