South Korea’s economy retreated in the second quarter of the year as weaker domestic demand clouded recovery prospects, despite robust exports, central bank data showed Thursday.
The country’s real gross domestic product — a key measure of economic growth — contracted 0.2 percent on-quarter in the April-June period, according to preliminary data from the Bank of Korea (BOK).
The second-quarter figure compares with the 1.3 percent on-quarter expansion in the January-March period, which marked the highest since the fourth quarter in 2021, when the economy expanded 1.4 percent.
On a yearly basis, South Korea’s economy advanced 2.3 percent in the second quarter, slowing from 3.3 percent growth for the first quarter of the year.
The contraction was somewhat widely expected due to a base effect.
Private spending contracted 0.2 percent on-quarter in the April-June period, compared with a 1.3 percent advance the previous quarter, the central bank said.
The country’s exports climbed 0.9 percent in the second q
uarter, slowing from the previous quarter’s 1.8 percent gain, while imports rose 1.2 percent, shifting from a 0.4 percent dip the previous quarter.
Government spending gained 0.7 percent, and construction investment went down 1.1 percent in the second quarter, a shift from the previous quarter’s 3.3 percent gain, according to the data.
Earlier this month, the central bank held its key interest rate steady at 3.5 percent for the 12th straight time amid moderating inflation and high household debt.
The rate freezes came after the BOK delivered seven consecutive rate hikes from April 2022 to January.
South Korea’s economic growth slowed to the lowest in three years last year due to a slump in exports amid tightening monetary policies around the globe.
The economy expanded 1.4 percent last year, slowing from a 2.6 percent advance in 2022 and 4.3 percent growth in 2021.
The 2023 expansion marks the lowest since a 0.7 percent contraction in 2020 during the coronavirus pandemic.
For the year, the bank expects
the economy to rebound slightly, at 2.5 percent.
The International Monetary Fund expects South Korea’s economy to grow 2.5 percent.
The South Korean government and the Organization for Economic Cooperation and Development presented a 2.6 percent expansion.
Source: Yonhap News Agency
