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South Korea's second-quarter economic growth almost halved compared with the previous quarter due to weak exports on the so-called based effect that offset recovering private consumption, central bank data showed Thursday.
Seasonally-adjusted real gross domestic product (GDP) rose 0.6 percent in the April-June quarter from the previous three-month period, according to the Bank of Korea (BOK).
The quarter-on-quarter growth rate almost halved from 1.1 percent tallied in the first quarter. The rate jumped from 0.5 percent in the fourth quarter of last year to 1.1 percent in the next quarter, before falling again below 1 percent in the second quarter.
Exports, which account for about half of the export-driven economy, retreated 3 percent in the second quarter on a quarterly basis, marking the lowest since the fourth quarter of 2008 when the global financial crisis peaked.
Goods exports slumped 2.9 percent, almost posting the lowest in 34 quarters.
Chung Kyu Il, director general of the BOK's economic statistics department, told reporters that global demand for cars weakened sharply in the quarter and that it led to a sharp fall in auto parts exports.
Chung said the services deficit was forecast to be maintained for the time being as the transport industry fell into the doldrums amid the ongoing restructuring among troubled shipping firms.
The country's exports posted an on-quarter fall in the second quarter, but it was mainly attributable to high growth in the first quarter. It was usually called the base effect.
Excluding the high base effect, the exports remained relatively stable. The overseas shipments kept a double-digit increase for six straight months through June, according to customs data.
Given the increased imports of capital goods, the exports outlook looked bright, the BOK official said, noting that demand for durable goods, sensitive to economic conditions, increased in the quarter.
The official expected a rosy picture for sales of smartphones and home appliances, citing the scheduled launches of flagship devices and the new home sales scheduled for the second half.
Private consumption and facility investment led the second-quarter GDP growth. Private consumption increased 0.6 percent on a quarterly basis, the fastest in six quarters. Facility investment jumped 5.1 percent.
The new government under President Moon Jae-in raised its 2017 growth forecast to 3 percent earlier this week from 2.6 percent estimated six months earlier.
To reach the revised growth outlook, the real GDP was required to expand an average of 0.78 percent in the third and fourth quarters, the BOK official said.
The BOK also revised up this year's growth outlook to 2.8 percent from 2.6 percent forecast three months ago. The upward revision did not reflect the effect from the supplementary budget plan.
The extra budget plan worth about 10 billion U.S. dollars was passed through the National Assembly last Saturday to help create decent jobs and prop up economic growth.
The government estimated the additional fiscal spending would increase the growth rate by 0.2 percentage points.
The government expenditure grew 1.1 percent in the second quarter from three months earlier, marking the highest in five quarters.
Investment in the consecution sector gained 1.0 percent, posting the highest in two quarters.
(ASIA PACIFIC DAILY)
