South Korea’s economy likely lost steam in Q2

BENGALURU, July 22 (Reuters) – South Korea’s economic growth likely slowed somewhat in the second quarter as lower exports and soaring import costs hurt private consumption which accounts for around half of economy, according to a Reuters poll.

Exports from Asia’s fourth-largest economy grew at their slowest pace in more than a year and a half in June as high inflation weighed on foreign demand for South Korean goods, widening the trade gap and fueling concerns about a global recession. Read more

According to median forecasts from 14 economists, South Korea’s export-driven economy is expected to have grown 0.4% in the latest quarter, a slowdown from the 0.6% rise in the previous quarter.

On a yearly basis, gross domestic product (GDP) likely rose 2.5%, according to the median of 19 economists, down from 3.0% growth in the first quarter. The data will be released on July 26.

“High oil prices, a slowing Chinese economy, weak exports and lower plant investment are expected to have put pressure on growth,” said Park Sang-hyun, an economist at Hi Investment & Securities. .

The economy is expected to lose momentum in the coming year as policymakers tighten fiscal spending to keep the debt-to-GDP ratio in check. The debt ratio of South Korean households is among the highest in the world.

“Higher-than-expected inflation and faster-than-expected rate hikes raise the risk of slower growth in 2023. Due to rising debt service and rising costs of living, consumer confidence consumers began to deteriorate,” Ma Tieying said. , economist at DBS.

That, combined with an economic slowdown in China, the country’s biggest trading and investment partner, will weigh heavily on the economy.

Growth is expected to average 2.5% this year, down sharply from last year’s 4.1%, according to a separate Reuters poll. It was then expected to fall further to 2.4% next year.

Reporting by Anant Chandak; Poll by Arsh Mogre; Editing by Ross Finley, Hari Kishan and Marguerita Choy

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