The Korea Development Institute(KDI) says South Korea’s economy is seeing limited recovery due to weakening growth in domestic demand. 

In its August report of the country's economic conditions released on Tuesday, the state-run think tank said though South Korea’s exports are maintaining growth, rise in domestic demand is weakening. 

The report assessed that facility investment is shrinking fast and construction investment is continuously seeing a slump. It also added that growth in retail sales is slowing and consumer sentiment-measuring indices are slipping.  

The index gauging facility investment fell nearly 14 percent on-year in June. In particular, investment in machinery plunged more than 18 percent during the same period.