South Korea’s economy grew at a faster-than-expected pace in the second quarter, remaining on track for recovery after avoiding a technical recession in the previous quarter.
Gross domestic product in Asia’s fourth-largest economy grew 0.6% on-quarter during the April-June period following a 0.3% increase in the first quarter, preliminary Bank of Korea data showed Tuesday. In the final quarter of last year, the economy had contracted 0.3% on quarter.
The latest reading — above the market consensus forecast of 0.5% growth — shows a moderating decline in facility investments on increased machinery production. Exports retreated again following a rebound in the prior quarter, as weaker shipments of petrochemicals and shipping services outweighed stronger exports of semiconductors and cars. Both government spending and private consumption remained weak.
Year-on-year, the economy expanded 0.9% in the second quarter, above the consensus forecast of 0.8% growth, following the prior quarter’s revised 0.9% growth.
The country’s economy is expected to slow this year, as global demand for electronics, chips and other Korean goods still remain sluggish while higher borrowing costs after years of policy tightening aimed at taming inflation are weighing on private spending and business investments.
Both the central bank and the government now expect the economy to expand 1.4% in 2023, lowered from their earlier forecast of 1.6%, following 2.6% growth in 2022.
They expect the economy to rebound gradually. The central bank projects 2.4% growth in 2024.