The Korea Development Institute (KDI) said South Korea's economy continues to improve, driven by strong semiconductor exports and investment linked to artificial intelligence infrastructure at home and abroad. August exports rose 68.7% from a year earlier as semiconductor shipments increased more than 200% on higher chip prices, while July facility investment climbed 24.9%. Industrial output rose 3.1% in July from the previous month, remaining above the second-quarter average of 2.9%. The recovery has not fully reached households: July retail sales fell 0.8% after rising 3.9% in June, and KDI said purchasing power was improving only modestly. The institute also cited uncertainty over U.S. tariff policy and geopolitical instability in the Middle East. An earlier assessment had described the economy as maintaining momentum after downgrading its description from expanding improvement, while the latest assessment emphasizes continued improvement led by AI-related sectors.