The country's Ministry of Economy and Finance said in its monthly report, called Green Book, that the South Korean economy continued to slow down mainly in manufacturing amid a slowing headline inflation.
The ministry maintained its pessimistic stance over the economy since February.
It noted that downside risks to the economy were eased on the back of the alleviated export slump, the moderate recovery in domestic demand and economic sentiment, and the solid employment.
Production in the mining and manufacturing industry dwindled 7.3 percent in May from a year earlier.
Export dipped 6.0 percent in June from a year earlier, but it was the slowest reduction this year.
Sentiment among businesses stood unchanged in June from the previous month, but consumer sentiment improved.
The number of jobs grew 333,000 in June from a year earlier, while the jobless rate retreated 0.3 percentage points to 2.7 percent.
Consumer prices added 2.7 percent in June on a yearly basis after gaining 3.3 percent in the prior month.
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