The South Korean economy is dogged by plunging exports stemming from fast falling oil prices and weakening global demand along with domestic consumption, which started to show some signs of a slowdown, the finance ministry said Friday.

Outbound shipments dived 18.6 percent to US$36.7 billion in January from a year earlier, marking the largest on-year drop in six years, according to the Ministry of Strategy and Finance in its latest economic assessment report called the Green Book.

The monthly decline widened from a 14.1 percent fall in December.

The sharp decline is caused by a drop in shipbuilding orders and petrochemical products amid oil prices plummeting 41.5 percent on-year to $27 over the one-year period.

"Shipments to nearly all regions except the European Union decreased, while a majority of products saw their exports retreat from a year earlier," the ministry said.

Industrial output, which is largely affected by a change in exports, fell 1.9 percent in December from a year ago, extending its losing streak to three months in a row, with sluggish production in the electronic parts and machinery sectors.

Domestic consumption, which has propped up the country's economic growth in the latter half of last year, is showing some signs of a slowdown in the new year as the effect of the government-led tax benefits and nationwide discount events waned.

Retail purchases rose 3.5 percent on-year in December, led by stellar sales of domestic cars, which jumped 17.7 percent on-year on the back of the tax cuts on expensive goods.

However, sales of passenger cars fell 4.5 percent on-year in January and are expected to drag down overall retail sales in the same month.

The consumer price index rose 0.8 percent in January, growing less than 1 percent for the first time in three months.

"We are facing expanding external downside risks such as an economic slowdown and financial turmoil in China, a possible U.S. interest rate hike, falling oil prices and North Korean issues,"

said the ministry. "We will exert all measures including budget frontloading to preemptively cope with such risks."

The finance ministry earlier said it will spend more than 40 percent of its 2016 budget in the January-March period to tackle plummeting exports and flaccid domestic consumption and extend the tax benefit program for an additional six months. (Yonhap)