The Korea Herald


S. Korea's economic growth gathers pace in Q2; outlook still murky

By Yonhap

Published : Sept. 5, 2023 - 09:26

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Shipping containers at a Busan Port, Aug. 1 (Yonhap) Shipping containers at a Busan Port, Aug. 1 (Yonhap)

South Korea's economy grew at a slightly faster pace in the second quarter of this year than three months earlier despite a slump in exports, central bank data showed Tuesday.

The country's real gross domestic product -- a key measure of economic growth -- increased 0.6 percent on-quarter in the April-June period, matching an earlier estimate, according to the Bank of Korea.

The second-quarter expansion is higher than the 0.3 percent expansion in the first quarter.

Asia's fourth-largest economy has been on a recovery pace since it contracted 0.3 percent in the fourth quarter last year.

On a yearly basis, South Korea's economy expanded 0.9 percent in the second quarter, the same as the first quarter's on-year gain.

The central bank said the second-quarter expansion came as imports fell at a faster rate than exports.

The country's exports decreased 0.9 percent in the April-June period, turning around from the previous quarter's 4.5 percent gain.

Imports tumbled 3.7 percent during the cited quarter.

The country's exports fell for the 11th consecutive month in August due mainly to weak demand for semiconductors and petroleum products, but the country reported a trade surplus for the third straight month.

Exports have been on a steady decline since October last year amid aggressive monetary tightening by major economies to curb high inflation and an economic slowdown. It is the first time since 2020 that exports have declined for 11 months in a row.

Private spending fell 0.1 percent in the second quarter, compared with a 0.6 percent gain the previous quarter.

Government spending also fell 2.1 percent in the second quarter, while facility investment increased 0.5 percent, according to the central bank data.

South Korea's economy has been facing growing uncertainty at home and abroad amid worries that aggressive monetary tightening in major countries, including the United States, could precipitate a global economic slump.

Last month, the central bank kept its growth outlook for the year at 1.4 percent but said that uncertainties over growth in the Chinese economy and its domestic impacts, growth in major economies and the timing of a rebound in the IT sector are judged to be high.

Also, the central bank held its key interest rate steady at 3.5 percent for the fifth straight time last month as it weighs a slowdown in growth amid moderating inflation.

The rate freezes came after the BOK delivered seven consecutive rate hikes from April 2022 to January 2023.

Last year, the country's economy grew 2.6 percent, slowing from a 4.3 percent advance the previous year amid aggressive monetary tightening at home and abroad.

The 2022 growth marked the slowest pace since 2020, when the economy contracted 0.7 percent amid the fallout from the coronavirus pandemic. (Yonhap)