South Korea’s economy ran at a faster clip of 0.8 percent than the preliminary estimate of 0.7 percent in the second quarter versus earlier three months on stronger consumption and aggressive fiscal stimuli.
According to preliminary data released by the Bank of Korea on Thursday, the country’s gross domestic product added 0.8 percent in the April-June period from the previous three-month period, up 0.1 percentage point from its preliminary estimate in July, although easing from 1.7 percent in the first quarter.
The first-half growth went against contractions in the year-ago period on the onset of Covid-19 pandemic. Asia’s fourth largest economy sank 1.3 percent on quarter in the first quarter and 3.2 percent in the second quarter. It shifted to positive growths of 2.2 percent in the third quarter and 1.1 percent in the fourth quarter.
Private consumption grew 3.6 percent in the April-June period, increased from preliminary gain of 3.5 percent, before the renewed flareup of Covid-19 in the second half. Spending surged on semi-durable goods such as apparels and on service including entertainment culture and restaurant and accommodation sectors. Consumption gained by the strongest in 12 years.
The Kospi ended Thursday 0.97 percent lower at 3,175.85. The Korean won closed the day at 1,161.5 against the U.S. dollar, down 4.3 won from the previous session.
Government spending on the back of supersized budget plus a supplementary increase jumped 3.9 percent on quarter led by health insurance payment. Facility investment added 1.1 percent, higher than preliminary estimate of 0.6 percent.
Exports softened 2 percent on quarter on stagnated shipments in automobiles and liquid crystal displays versus the first quarter after losing steam to gains of 2.0 percent in the first quarter from 5.3 percent in the fourth quarter and 16.3 percent in the third quarter of 2020.
Imports rose 2.8 percent on quarter on the back of inbound shipments of chemical products.
Export and import figures are both unchanged from earlier July estimate.
Private consumption contributed to the second quarter economic growth by 1.6 percentage points while net exports ate into growth by 1.7 percentage points. Government spending raised growth by 0.7 percentage point.
By sector, service industry gained 2.1 percent in the April-June period from the previous three-month period compared to earlier estimate of 1.9 percent. Construction sector fell 1.3 percent, manufacturing 1.3 percent, agriculture and fisheries 12.7 percent, and electricity, gas, and water 4.1 percent.
Transportation sector soared 9.7 percent
Korea’s nominal gross national income (GNI) added 2.4 percent on quarter and real GNI 0.1 percent.
The BOK stayed sanguine about growth prospects for the third quarter despite the worst-ever outbreak that placed the country under stronger after-dark curfew on businesses.
Facility and construction investments and robust exports will likely offset the negative impact on domestic demand from the heightened social distancing rules, the bank said.
The BOK has set GDP growth target at 4.0 percent for this year. It expected a growth sustained at a pace of 0.6 percent growth in third and fourth quarters could achieve the annual target.
By Lee Eun-joo
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