SEOUL (Reuters) – South Korean economic growth unexpectedly accelerated in the second quarter from the preceding three months on strong private consumption lifted by eased COVID-19 restrictions, central bank estimates showed on Tuesday.
The Bank of Korea estimated gross domestic product for the April-June period had been 0.7% higher than in the previous quarter, after a 0.6% rise seen in the January-March period and 1.3% in the last quarter of 2021.
It was stronger than a 0.4% gain tipped in a Reuters survey of 14 economists.
Second-quarter GDP for Asia’s fourth-largest economy was 2.9% higher than a year earlier, compared with a median forecast for annual 2.5% growth seen in the same survey.
Private consumption jumped 3.0%, the best in a year, after a 0.5% decline in the first quarter as the government removed almost all social-distancing restrictions aimed at fighting the spread of coronavirus infections by the end of April.
The strong consumption came despite the central bank’s series of interest rate hikes since August last year to tame rapid inflation.
The economy also received a boost from increased government spending after the parliament approved a 62 trillion won ($47.33 billion) supplementary budget weeks after President Yoon Suk-yeol took office in early May.
However, exports and corporate spending on production facilities slumped amid a slowing Chinese economy and the fallout from a war in Ukraine as well as a global wave of monetary policy tightening to fight inflation.
Exports shrank 3.1% in the April-June period from the preceding quarter, the largest decline in two years. Capital investment dropped for a fourth consecutive quarter by 1.0% following a 3.9% contraction in the January-March period.
($1 = 1,309.8700 won)
(Reporting by Jihoon Lee and Choonsik Yoo; Editing by Bradley Perrett and Sam Holmes)
