The Korean economy is showing flaccid recovery momentum as weak exports and sluggish investment offset a modest rise in private consumption, a state-run think-tank said Wednesday.

"The slowdown in production-related indicators moderated, but the upward momentum in overall economic activities has been insignificant," the Korea Development Institute said in its monthly evaluation of the country's economic conditions.

"However, exports and facilities investment remained in a slump, while the manufacturing capacity utilization rate stayed low, weighing down on the economic recovery."

The country's industrial output rose 4.3 percent on-year in May on a base effect, rebounding from a 2.6-percent fall tallied in April, while services production recorded 3.4 percent on-year growth in May, accelerating from a 1.9-percent gain a month ago.

Domestic consumption continued their upbeat mode in May, as retail sales advanced 5.1 percent in May on the back of robust sales of durable goods like passenger cars.

But the KDI report noted that overall economic activities remain weak as the capacity utilization rate of the manufacturing sector remained at 72.8 percent and facilities investment-related indicators have stayed low for months.

It attributed the sluggish recovery to a prolonged slump in the country's exports, the key economic driver.

The export reduction rate slowed from 6 percent in May to 2.7 percent in June mainly on the back of a 30-percent jump in overseas sales of ships.

Exports of key items like cars, machinery and petroleum products posted minus growth last month.

"Exports exhibited a slower decline temporarily due to the sharp increase in vessel exports, but the slump is deemed sustainable," said the think tank. "The overall downward pace remained similar to last month if the highly volatile vessel exports are excluded." (Yonhap)