The state-run Korea Development Institute(KDI) says the domestic economy remains in a weakened state amid a slump in the construction sector and stagnant exports driven by increasing U.S. tariffs.

In a monthly assessment report issued Tuesday, the KDI said that while the economy has not weakened further, the lackluster situation has persisted.

Production in the construction industry dropped 20-point-five percent in April while the service sector also slowed, with production rising only zero-point-seven percent.

Industrial output in the same month expanded zero-point-four percent despite a 21-point-eight percent surge in the production of semiconductors.
 
Exports fell one-point-three percent in May, with shipments to the U.S. declining eight-point-one percent, reflecting a 32 percent drop in auto exports due largely to the sharp increase in U.S. tariffs.
 
Domestic demand, meanwhile, has shown signs of improvement amid easing political instability with the launch of a new government.