South Korea avoids technical recession as GDP expands 0.6% in second quarter
View across the Hangang River in Seoul, South Korea.
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South Korea avoided a technical recession as its economy expanded by 0.6% from the previous quarter, beating expectations, according to advance estimates.
This was higher than the 0.5% expected by economists polled by Reuters, and a reversal from the 0.2% contraction seen in the first quarter.
On a year-over-year basis, the country’s GDP rose 0.5%, up from 0% in the first quarter and higher than a 0.4% expansion expected by the Reuters poll.
Total consumption, which includes private and government expenditure, increased 0.7% from the previous quarter, a stronger showing compared to the 0.1% contraction seen in the first three months of the year.
Government expenditure, which rose 1.2% quarter over quarter, was mostly powered by an increase in healthcare benefits, while private expenditure, which increased by 0.5% in the same period, was driven by increased spending on motor vehicles, as well as recreation and sporting activities.
Data from the Bank of Korea showed exports of both goods and services grew strongly in the second quarter, rising 4.2% quarter over quarter as shipments of semiconductors, petroleum products, and chemical products increased.
South Korea is currently trying to close a trade deal with the U.S., failing that, the country’s exports to the U.S. would be hit with a 25% tariff from August 1.
Exports of goods and services make up about 44% of South Korea’s GDP in 2023, according to the latest figures from the World Bank, with the U.S. as its second-largest export market.
South Korean media outlet Yonhap reported that Seoul has ruled out changes to beef and rice imports as bargaining chips in tariff negotiations with the United States.
The BOK held rates in its previous monetary policy meeting on July 10, despite noting a stable inflation rate and forecasting low growth for the country, choosing to focus on financial stability.
Inflation in South Korea stood at 2.2% in June, just slightly above the BOK’s 2% target.
—This is breaking news, please check back for updates.
