South Korea posted economic growth of less than 1 percent for the fifth consecutive quarter amid the protracted slump in private consumption and exports, data from the Bank of Korea showed Thursday.
The BOK said the nation’s gross domestic product expanded 0.3 percent in the second quarter, compared to the previous quarter.
After peaking at 1.1 percent in the first quarter of 2014, the quarter-to-quarter growth stayed below 1 percent last year ― 0.5 percent in the second quarter, 0.8 percent in the third quarter and 0.3 percent in the fourth quarter.
The stagnation also continued over the past few months with the GDP expansion staying at 0.8 percent in the first quarter of 2015.
The outbreak of the Middle East respiratory syndrome further undermined consumer sentiment, which pulled down growth to 0.3 percent in the second-quarter.
Private consumption dropped 0.3 percent compared to the first quarter in the wake of the MERS virus, which dealt a blow to the nation in late May and June, said a BOK official.
In addition, a drought caused an 11.1 percent quarter-to-quarter drop in the output of the agricultural and fisheries sector. Exports and facilities investment inched up 0.1 percent and 1.7 percent, respectively.
The situation is raising the possibility that the nation could face a longer-than-expected low-growth period.
The BOK, which cut the benchmark interest rate to a record low of 1.5 percent in June, has revised its outlook on the year-on-year GDP growth from the earlier 3.1 percent to 2.8 percent.
The Finance Ministry is pinning hopes on the supplementary budget, which is under review at the National Assembly, to prop up the economy.
Citigroup has predicted that Korea’s private consumption would recover. But the investment bank cited problematic factors such as weak global demand and uncertainty over efficacy of the Korean government’s extra fiscal stimulus.
Nomura Securities cited the worsening financial market situation from weak economic indexes and rise in bond rates as a factor restricting future growth momentum.
U.S.-based investment bank Bank of America-ML had pointed out the slump in exports in the wake of the economic slowdown in China and the United States, both of which are Korea’s main trading partners.
Some analysts recently said the outlook on the export sector, including automobiles and information technology, has become positive, compared to the first half of the year.
They highlighted the U.S. dollar and Japanese yen’s continuous gains versus the Korean won since early this month.
By Kim Yon-se
(kys@heraldcorp.com)