SEOUL: South Korea’s economy expanded at the fastest annual pace in a decade in the second quarter, thanks to a pick up in private consumption, though a resurgence of COVID-19 casts doubt over the outlook for growth for the rest of the year.
Tuesday’s data from the Bank of Korea showed gross domestic product (GDP) grew 0.7per cent in the second quarter, after rising 1.7per cent three months earlier and matching a 0.7per cent growth tipped in a survey, report agencies.
That, however, missed market forecast growth of 6.0per cent for the annual reading.
The result would be no surprise to the BOK, which is expected to be the first Asian economy to raise interest rates from pandemic-era lows, anticipating a 4per cent economic expansion and a revival in inflation.
But economists see the pace of growth slowing in the third quarter as the government brought in its toughest coronavirus restrictions yet to contain the worst outbreak in the country.
While exports surged 22.4per cent on-year, they declined 2.0per cent from the previous quarter and became a net drag to economic output in the second quarter, suggesting growth may plateau in the months ahead.
The main driver of growth in the second quarter was private consumption and government expenditure, which rose 3.5per cent and 3.9per cent, respectively, on-quarter. Facility investment gained a mere 0.6per cent after jumping 6.1per cent in the previous quarter.