South Korea economy averts recession but faces solid headwinds

South Korea economy averts recession but faces tricky headwinds
© Reuters. A girl stores at a market in Seoul, South Korea, July 26, 2016. REUTERS/Kim Hong-Ji/File Photo

By Choonsik Yoo and Jihoon Lee

SEOUL (Reuters) -South Korea’s heavily alternate-reliant economy barely averted a recession posting slim exclaim in the first quarter, but the outlook remained clouded by extinct exports due to the a cooling global economy, even with China’s reopening.

South Korea’s ugly home product (GDP) in the first quarter expanded by 0.3% over the old three-month length, official advance estimates confirmed on Tuesday, when put next with a median 0.2% upward push tipped in a Reuters stare.

Unexcited, economists seen it as small extra than a technical rebound after a 0.4% contraction for the length of the closing quarter of 2022, which became as soon as the first decline in 2-1/2 years, and strengthened their inspect that the central bank’s tightening cycle is over.

“I raze no longer watch any signal of energy from the detailed figures concerning the lengthy crawl course of the economy,” stated Oh Suk-tae, economist at Societe Generale (OTC:) Securities in Seoul, at the side of he retains his forecast for 0.8% exclaim for the total 12 months.

The largest contributor to GDP for the length of the first quarter became as soon as private consumption, posting exclaim of 0.5%, while capital funding dented financial exclaim, dropping 4.0%. Exports rose 3.8%, while imports grew 3.5%.

There may perhaps be high uncertainty each and each externally and internally, but a restoration in the IT sector and the Chinese language economy is liable to stoke a rebound in the 2nd half of of the 12 months, a central bank official stated at a media briefing. 

The Bank of Korea stated earlier this month that this 12 months’s financial exclaim may perhaps possibly be weaker than its earlier projection of 1.6%, because the central bank left passion rates staunch for the 2nd consecutive assembly in a row.

Economists now establish a matter to the Bank of Korea no longer to hike passion rates extra after having raised them by 300 basis gains since unhurried 2021.

Over a 12 months earlier, the country’s ugly home product (GDP) expanded 0.8% for the length of the January-March length, in line with the Bank of Korea’s estimates, when put next with gains of 1.3% in the prior quarter and nil.9% tipped in the stare.

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