(Bloomberg) -- South Korea’s economic expansion met expectations in the second quarter as exports held up despite global trade friction.
Big Picture
These latest figures may bolster the central bank’s confidence after it recently trimmed the country’s economic growth projection to 2.9 percent from 3 percent. Higher borrowing costs could now be on the cards for Korea at the next monetary policy gathering in August, after one board member voted to hike interest rates at the July meeting. The economy is continuing firm growth despite trade risks.
Economist Takeaways
- Stephen Lee, an economist at Meritz Securities Co., had expected growth to improve slightly year-on-year, but for the quality of the expansion to deteriorate as domestic demand softened.
- "The BOK is expected to raise the policy rate in August, but if it holds, then no more move is likely throughout the year," Lee said before the data release.
- Lee expects 2.7 percent GDP growth for this year, a tad lower than the BOK’s estimate.
The Details
- Exports as measured by volume in GDP increased 0.8 percent in the second quarter from the previous quarter, when they rose 4.4 percent.
- Imports as measured by volume in GDP contracted 2.6 percent, reversing from a 4.9 percent increase.
- Infrastructure investment fell 6.6 percent after rising 3.4 percent in the previous quarter and construction investment also fell, by 1.3 percent from the previous quarter, when it gained 1.8 percent.
- Government spending climbed 0.3 percent.
- Private spending edged up 0.3 percent.