South Korea's domestic demand is expected to remain sluggish in the second half of the year due to stagnant economic growth, a private think tank said Tuesday.

In its second-half outlook, the Hyundai Research Institute said that domestic consumption is likely to be very static in the July-December period, which could require stimulus measures to ensure the economy makes a soft landing.

The think tank noted that a slump in consumption and investment, and worsening real purchasing power will dampen domestic demand, adding that domestic shipments posted minus growth in April and May compared with a year ago.

The HRI said South Korea's exports may also face tough challenges in the coming months. Second-half exports will be greatly affected by China's economic future policy, it added.

By business sector, the HRI said shipbuilding companies will suffer most from weak global demand, and the information technology industry will be hit hard by a slowdown in the U.S. economy.

South Korea's machinery, steel, automobile and petrochemical businesses are projected to experience harder times in the second half, while shipping companies and builders may be able to make a comeback, according to the think tank.

"Plans should be set to make certain South Korea's economy lands softly," said the HRI in the outlook. "The government should lift regulations on consumer goods and the service sector, and move to implement stimulus packages."

(Yonhap News)