South Korea's economy grew at a faster pace in the second quarter of this year as private spending rose amid eased coronavirus restrictions despite shrinking exports, central bank data showed Thursday.
The country's gross domestic product (GDP) -- a key measure of economic growth -- increased 0.7 percent in the April-June period from three months earlier, according to the preliminary data from the Bank of Korea (BOK). The growth slightly quickened from the previous quarter's 0.6 percent rise.
The latest figure was unchanged from the BOK's earlier estimate announced in late July. The revision reflected updates in data on industrial output and other key economic indicators.
The faster on-quarter growth is attributed to a robust increase in private spending that has been bolstered by eased pandemic-related restrictions.
In mid-April, South Korea lifted most COVID-19 restrictions, except the mask mandate, as part of efforts to return to pre-pandemic life.
Private spending expanded 2.9 percent on-quarter in the second quarter thanks to a rise in spending on food, lodging and other outdoor activities. The government's spending also rose 0.7 percent over the same period.
Investment on construction edged up 0.2 percent, while facility investment gained 0.4 percent thanks to a rise in spending on machinery.
From earlier estimates, private spending was revised down 1 percentage point, with government and construction spending lowered by 0.4 percentage point each. Facility investment, meanwhile, was revised up 1.5 percentage points, the data showed.
Exports shrank 3.1 percent with chemical and metal products suffering sluggish sales. Imports declined 1 percent owning to decreased bills for crude oil and natural gas.
South Korea's economy has been facing growing uncertainty from home and abroad, amid worries that fast monetary tightening in major countries, including the United States, could precipitate a global economic slump.
Exports, in particular, are showing signs of losing steam in the face of recession woes and tough coronavirus restrictions in China. Shipments to China shrank 5.4 percent on-year in August, government data showed.
Consumption is also feared to slow down as the country's central bank has raised borrowing costs at a fast place to rein in fast-rising inflation that could undercut people's purchasing power.
The central bank has increased its interest rate by a combined 2 percentage points to 2.5 percent, including the latest 0.5 and 0.25 point rises in July and August, respectively.
The BOK earlier revised down its economic growth outlook for this year to 2.6 percent from 2.7 percent predicted three months earlier. It also raised its inflation outlook for this year from the previous 4.6 percent to 5.2 percent.
The BOK predicted that exports will likely grow at a slower pace down the road amid the prolonged war in Ukraine, monetary tightening in major countries and the growing possibility of global recession.
"Still, private consumption is expected to recover, albeit slowly, centering on demand for in-person services thanks to the move to return to normalcy," a BOK official said
He predicted that the country will be able to achieve the BOK's growth projection for this year should the economic growth rates stay in the 0.1-0.2 percentage range in the third and fourth quarters.
The economy grew 4.1 percent last year, the fastest growth since 2010, when it posted a 6.8 percent rise. (Yonhap)
