South Korea’s Q2 GDP beats estimates on chip export boom
FILE PHOTO: A view shows Samsung Electronics’ chip production plant at Pyeongtaek, South Korea, in this handout picture obtained by Reuters on September 7, 2022. Samsung Electronics/Handout via REUTERS /File Photo
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SEOUL, July 23 : South Korea’s economy grew faster than expectations in the second quarter, driven by a semiconductor export boom that offset a decline in construction investment, advance estimates from the Bank of Korea showed on Thursday.
Gross domestic product expanded 0.6 per cent in the April-June period from a quarter earlier on a seasonally adjusted basis, faster than a median estimate of 0.4 per cent from a Reuters poll.
The result marks a sharp deceleration from the blistering 1.8 per cent growth of the first quarter, but suggests chip-led growth can keep the economic engine running as policymakers embarked on a tightening cycle with a 25-basis-point hike in July.
“As long as we see quarterly (growth) rate that is higher than minus 0.1 per cent in the second half, on an average, it would be possible to see annual growth of 3 per cent” this year, a BOK official said in a news conference.
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The central bank in May raised this year’s growth outlook to 2.6 per cent, which is due to be revised in August.
With the headline inflation figure at a 2-1/2-year high in South Korea, a majority of analysts see the central bank delivering at least one more rate hike before the end of the year to take the policy rate to 3.00 per cent.
The BOK is expected to raise its key rate to 3.25 per cent in the first quarter of 2027 and keep it there until at least the end of next year, according to median forecasts in a Reuters poll.
On a year-on-year basis, GDP expanded 3.7 per cent, also beating a median estimate of 3.5 per cent.
Growth was driven by a 1.4 per cent gain in exports from a quarter earlier, led by shipments of “semiconductors, machineries and equipment,” the central bank said.
Private consumption expanded 0.4 per cent, while construction investment declined 0.2 per cent from the first quarter.
Source: Reuters
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