A domestic think tank has said in its monthly evaluation that faltering exports and decreased output in mining and manufacturing are restricting economic recovery.

In the January issue of its monthly "Economic Trends" publication, the Korea Development Institute(KDI) also said that domestic demand however was gradually improving. It cited a five-point-five percent year-on-year rise in the retail sales index in November affected by a special consumption tax reduction.

The evaluation said the nation's exports remain sluggish, as they plunged 13-point-eight percent in December compared to the same month in 2014.

The KDI said that stagnant shipments are likely to continue amid growing external uncertainties including concerns over the Chinese economy.