South Korea’s economy is expected to have grown by 0.6% in the last quarter, maintaining the same pace of expansion as in the previous three months. This growth is attributed to the notable uptick in export performance, particularly in the semiconductor sector, which is a good indicator of global trade health.
According to a Reuters poll of economists, Gross Domestic Product (GDP) for the January-March period grew by 0.6% quarter-on-quarter on a seasonally adjusted basis. This growth is in line with expectations and forecasts ranged from 0.3% to 1.1%.
While exports and manufacturing have remained strong, consumer demand continues to be a weak point for the South Korean economy. Retail sales data from January and February indicate a continued weakness in spending, with factors such as elevated interest rates and a cooling labor market weighing on demand.
Despite the challenges in consumer demand, South Korea’s GDP is expected to have expanded by 2.4% year-on-year last quarter, faster than the growth in the preceding quarter. This would mark the fastest growth rate since Q3 2022.
However, the uneven growth in China, South Korea’s biggest trading partner, and the country’s high level of debt could pose challenges to the ongoing economic recovery. Additionally, the Bank of Korea’s interest rate hikes and the need to see inflation moving towards the bank’s target could further impact consumption and economic growth in the coming months.
Overall, South Korea’s economy is showing signs of resilience, driven by strong exports, but challenges remain in the form of weak consumer demand and external economic factors.