Shipping containers are stacked at a port in the southeastern city of Busan, March 2. Yonhap

Korea's economy is facing "increasing" downside risks due to a prolonged slump in the construction sector and worsening export conditions amid concerns over a global trade war, a state-run economic think tank said Monday.

"Recently, the domestic economy has shown signs of mounting downside risks due to sluggish construction and deteriorating export conditions," the Korea Development Institute (KDI) said in its monthly economic assessment report.

The KDI has now noted downside risks for three consecutive months.

While the impact of political uncertainty has partially eased, worsening external conditions continue to weigh on the nation's export-dependent economy, the KDI said.

The think tank pointed out that consumer and business sentiment indicators suggest the economy is gradually recovering from the shock caused by President Yoon Suk Yeol's brief imposition of martial law in December.

However, concerns over a global trade war intensified as U.S. President Donald Trump has escalated tariff measures against major trading partners in an effort to reduce America's trade deficits and achieve broader policy goals.

In addition to the slowing growth of semiconductor exports, the persistent underperformance of other export items has led to a low overall export growth rate, the KDI added.

The think tank pointed out that while Korea's manufacturing sector has shown modest improvement, sluggish construction investment and weak employment in the construction sector persist. (Yonhap)