The Bank of Korea reported on Thursday that the GDP increased by 0.6% in the three months that ended in June compared to the previous quarter, following a 1.8% expansion from January to March.
A Bloomberg Report said that the government, the central bank, and the International Monetary Fund have all repeatedly upgraded South Korea’s growth outlook as a result of stronger-than-expected economic data, even though Thursday’s figures are a step down from the blowout first-quarter figures, which showed the fastest growth since late 2021.
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This will bolster the argument that central bank policymakers, who raised rates last week for the first time since 2023, should think about raising them again in the upcoming months. According to a recent study of economists, they anticipate another move before October, with a minority speculating that it would take place at the board meeting on August 27.
As per Bloomberg, BOK Governor Shin Hyun Song stated following the raise on 16 July that policymakers would continue to be hawkish as long as inflation stays over target, economic growth picks up steam, and threats to financial stability keep growing. At its meeting next month, the BOK indicated it will “substantially” increase its growth projection.
As the war in Iran, which began in late February, affected the economy, economists had forecast a slower rate of growth in the most recent quarter compared to the beginning of the year. Due to its economy’s heavy reliance on energy imports, South Korea is particularly vulnerable to rising oil prices and import expenses. Some of the benefits of the semiconductor boom were countered by that detrimental effect.
Even if the overall growth narrative persisted, second-quarter GDP was also largely anticipated to decline after an unusually robust first quarter. Despite strong orders, chipmakers found it difficult to increase manufacturing fast enough to satisfy the rising demand for AI-related products.
(Edited by : Juviraj Anchil)
