The Korean economy is showing signs of a "broader improvement" on the strong performance of chip-related industries, a state-run think tank said Monday, although uncertainties in the Middle East are expected to intensify inflationary pressures. "The Korean economy showed signs of broader improvement, led by semiconductor-related sectors," the Korea Development Institute (KDI) said in its monthly economic assessment. "Exports and equipment investment continued to grow strongly, driven by semiconductors, while consumption growth accelerated, led by durable goods," it added. "All-industry production posted relatively high growth, as services maintained a favorable trend and manufacturing rebounded," the KDI also said. The KDI, however, noted Asia's No. 4 economy still faces uncertainties, including U.S. tariff policies and lingering geopolitical instability in the Middle East. The think tank also pointed out that the country's still-elevated inflation and weakening employment conditions pose economic challenges. Korea's monthly exports soared to the second-highest level ever in July, rising n