Weak exports stemming from falling oil prices and weak global demand are dragging down South Korea's industrial output and business investment despite improving domestic consumption, the finance ministry said Tuesday.

Outbound shipments plunged 13.8 percent to $42.64 billion in December from a year earlier due a sharp drop in petrochemical products and shipbuilding orders, the Ministry of Strategy and Finance said in its latest economic assessment report called the Green Book.

The monthly decline widened from a 4.8 percent drop in November and also marked the second-largest fall throughout 2015 following a 15.2 percent on-year dive in August.

"Faltering exports have held back industrial production and investment," the ministry said.

Investment in facilities fell 6 percent on-month in November, as investments in transportation equipment and machinery contracted 14.4 percent and 1.8 percent, respectively, compared with the month before.

Output in the critical mining, manufacturing, gas and electricity industries slid 2.1 percent on-month in November, extending its losing streak to two months in a row.

On the other hand, retail sales were on a roll last month on the back of rising demand for durable goods, including cars.

Sales of domestic cars jumped 17.7 percent on-year in December, up from a 16.3 percent gain a month earlier, as the government temporarily cut taxes on expensive goods.

On the back of rising car sales and cheaper oil prices, sales of gasoline and diesel at the pump rose 2.4 percent on-year.

But the finance ministry said South Korea is facing escalating downside risks, such as the unstable Chinese financial market, the U.S. tightening monetary policy, fast-falling oil prices and North Korea's recent nuclear test.

"We will closely monitor the financial and foreign currency markets and the global economic trend, and if necessary, we will take an immediate action according to our contingency plan," the ministry said. (Yonhap)