South Korea posted stronger-than-expected growth in the second quarter as a solid recovery in private consumption and government spending offset weakness in exports and business investment.
Gross domestic product grew 0.7% during the April-June period from the prior quarter, faster than a revised 0.6% expansion for the first quarter, preliminary Bank of Korea data showed on Tuesday.
The latest reading beat a market forecast of 0.4% quarter-on-quarter growth.
Private consumption picked up solidly and swung to expansion while government expenditure maintained growth in the second quarter. Exports, however, shrank significantly with facilities investment remaining in contraction during the period.
Year-on-year, the economy expanded 2.9% in the second quarter, marginally moderating from the prior quarter’s revised 3.0% growth but beating a market forecast of a 2.6% expansion.
The Bank of Korea expects the country’s annual GDP growth to undershoot its May forecast of 2.7% for 2022, with exports losing steam and inflation weighing on spending and investment at home.
The bank this month delivered its first-ever half-percentage-point rate increase to cool inflation, which in June hit the highest in more than two decades.