S Korea’s GDP grows by more than expected in Q2 2022: ING




South Korea’s gross domestic product in the second quarter (Q2) this year rose by 0.7 per cent quarter on quarter (QoQ) versus 0.6 per cent in Q1, beating the market consensus of 0.4 per cent, according to Dutch multinational banking and financial services corporation ING. The contributions to GDP showed a drag from net exports while the recovery in private consumption led overall growth.

Exports and imports fell by 3.1 per cent and 0.8 per cent respectively, reflecting weak external demand for chemicals and basic metals.

South Korea’s gross domestic product (GDP) in the second quarter (Q2) this year rose by 0.7 per cent quarter on quarter (QoQ) versus 0.6 per cent in Q1, beating the market consensus of 0.4 per cent, according to Amsterdam-based ING. The contributions to GDP showed a drag from net exports while the recovery in private consumption led overall growth.

As China is the main destination for basic metals and chemicals, the strict lockdown measures in Q2 appeared to have had a negative impact on South Korea’s exports, ING noted. The decline in oil imports also suggested weak external demand as most of the imported oil is re-exported through refining.

Domestic demand grew solidly mainly due to a strong recovery in consumption while investments remained relatively soft. 

Private consumption was up by 3 per cent with semi-durable goods consumption and services increasing.

ING expects consumption-driven growth to slow this quarter. The initial pent-up demand-driven spending will normalise soon as high inflation weakens consumers’ purchasing power.

Survey data suggests that consumer sentiment has been hit faster and harder than expected by the Bank of Korea’s recent rate hikes. The debt repayment burden will increase as more than 70 per cent of outstanding loans are based on floating rates.

The recent resurgence of COVID cases will also rein in consumer spending and activity to some extent. External demand conditions will also adversely affect the South Korean economy as demand from the United States and the European Union is expected to slow sharply.

Despite all these downside risks, ING does not expect a contraction in the second half of this year.

Fibre2Fashion News Desk (DS)





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