By Jihoon Lee
SEOUL (Reuters) – South Korea’s economy accelerated faster than expected in the second quarter, boosted by an overall improvement in trade, even as weak consumer and business spending increased the case for the central bank to ease restrictive monetary policy.
Gross domestic product (GDP) rose 0.6% month-on-month in April-June on a seasonally adjusted basis, after rising 0.3% in the past three months, according to the Bank of Korea’s preliminary estimate.
beat the median forecast for a 0.5% rise in a Reuters poll of economists and marked the biggest quarterly gain since the 1997 second quarter.
In spending terms, exports fell 1.8%, but imports fell at a faster pace of 4.2%, contributing 1.3 percentage points to net growth in an economy heavily reliant on trade.
“Qualitatively, it’s not as positive as the headlines” said Park Sang-hyun, chief economist at HI Investment Securities. “Growth will improve ahead, but it’s too early to talk about a recovery as a downturn in China could delay an already weaker-than-earlier recovery in exports.” .9%, the highest level since the beginning of the year 1997.
GDP rose 0.9% in the quarter from a year earlier, compared with a 0.9% expansion in the January-March quarter and economists’ forecast of 0.8%.
Asia’s fourth-largest economy is expected to grow 2023 1.4%, down from 1997’s 2.6%, according to latest forecasts. Shivaan Tandon, emerging Asia economist at Capital Economics, said: “As a result, the central bank is likely to support the economy by easing monetary policy in the coming months, driven by lower inflation.”