The South Korean government saw continued downside risks to the economy amid the Middle East tensions, a finance ministry report said Friday.

The Ministry of Economy and Finance said in its monthly report, called Green Book, that the Asian economy recently faced lingering downward risks stemming from the Middle East conflict despite the continued recovery trend shown in the significantly expanding first-quarter growth.

A man, center, fuels up a vehicle at a gas station in Seoul, South Korea, Tuesday, March 10, 2026. (Photo: AP)

While the semiconductor-driven export growth persisted and domestic demand improved, the Middle East tensions dampened consumer sentiment and raised concerns over rising inflation caused by higher global oil prices and an increased burden on people's livelihoods, the ministry explained.

Despite the moderate growth of the global economy, the Middle East conflict heightened volatility in global financial markets and energy prices, causing concerns about supply chain disruptions, inflationary pressures and a slowdown in growth, the ministry noted.

The country's seasonally-adjusted real gross domestic product (GDP), adjusted for inflation, grew 1.7 percent in the first quarter compared to the previous quarter, marking the fastest expansion in five and a half years since the third quarter of 2020.

Export soared 48 percent in April from a year earlier thanks to surging semiconductor demand, but the composite consumer sentiment index declined 7.8 points from a month earlier to 99.2 in April.

Facility investment rose 1.5 percent in March from a month earlier, and retail sales mounted 1.8 percent in the cited month.

Consumer prices gained 2.6 percent in April on a yearly basis, faster than an increase of 2.2 percent in the previous month.

The number of jobs added 74,000 in April from a year earlier after swelling 206,000 in the prior month.