The South Korean government assessed that domestic demand is gradually improving as the COVID-19-led slump in the service sector has begun to ease.

In its monthly economic assessment report on Friday, the Finance Ministry said the improvement also comes amid recoveries in manufacturing and investment on the back of robust exports.

Reflecting improved private spending, the use of credit cards grew 18-point-three percent on-year in April, marking the third straight month of gains. Sales at department stores rose 26-point-eight percent on-year last month.

The consumer sentiment index(CSI) rose one-point-seven points to 102-point-two.

Consumer inflation grew two-point-three percent, the fastest on-year pace in almost four years, due to last year's low base and higher prices of farm and oil products.

The ministry cited the coronavirus' resurgence in emerging countries and U.S. inflation concerns as potential downside risks for the domestic economy.