The state-run Korea Development Institute(KDI) assessed for the first time in two years that downward risks in the domestic economy are escalating.

In a monthly assessment report on Wednesday, the KDI said economic improvement has been delayed amid a slowdown in industrial output growth.

The report also attributed the exacerbation of downward risks to weakened economic sentiment due to heightened uncertainties, as well as the political turmoil following President Yoon Suk Yeol's martial law declaration and impeachment.

The KDI assessed that while the impeachment crisis had a relatively limited impact on the foreign exchange and stock markets, it has significantly weakened both consumer and business sentiments.

While semiconductor production has remained strong, growth in other industries and exports have slowed, with performance in the construction sector showing persistent weakness.