The South Korean economy expanded 0.6 percent in the second quarter from three months earlier, growing at the slowest pace in five quarters as sluggish consumption sapped growth, central bank data showed Thursday.
The quarterly growth in the country’s gross domestic product, the broadest measure of economic performance, slowed from a 0.9 percent on-quarter growth in the first three months of the year, according to the Bank of Korea. It also marked the weakest growth since 0.6 percent in the first quarter of 2013.
From a year earlier, Asia’s fourth-largest economy expanded 3.6 percent in the April-June period, weakening from a 3.9 percent on-year growth in the previous quarter.
The figure marks the first slowdown since the third quarter of 2012, when on-year growth slowed to 2.1 percent from 2.4 percent.
The BOK credited the second-quarter turnout to lackluster domestic demand that was hit by the mid-April Sewol ferry accident that left more than 300 people dead.
“While exports continued to grow in the second quarter, domestic demand was sluggish, with private spending shifting to a contraction,” said Jung Young-taek, the director-general of the BOK’s economic statistics division, noting that “sentiment is weaker than expected.”
In addition to the Sewol sinking, Jung said a mix of factors, such as a regulatory ban on mobile carriers, an increase in utility fees stemming from warm weather and ongoing layoffs at financial firms, hampered private spending.
The preliminary data showed that exports climbed 1.9 percent on-quarter, accelerating from a 1.5 percent gain in the first quarter, buoyed by solid shipments of liquid crystal display screens and chemical products.
Private consumption contracted 0.3 percent from the previous quarter, reversing from a 0.2 percent gain in the first quarter. It marked the first contraction since a 0.1 percent fall in the first quarter of last year.
Facility investment gained 1.3 percent, turning around from a 1.9 percent contraction in the previous quarter. Construction investment inched up 0.6 percent, weakening from a 5.1 percent on-quarter jump three months earlier, according to the data.
The data comes as a continued slump in domestic demand is adding to the government’s headaches.
Earlier this month, the central bank trimmed its growth outlook for the year to 3.8 percent from 4 percent, factoring in the impact of the Sewol disaster.
The BOK’s monetary policy committee also left the base rate at 2.5 percent for a 14th straight month in July, citing increasing downside risks facing Asia’s fourth-largest economy. (Yonhap)