August 2, 2022
As loosening pandemic restrictions sparked robust consumption, South Korea’s economy expanded faster than anticipated in the second quarter, supporting the need for additional interest rate increases to rein in growing inflation.
According to figures from the Bank of Korea (BOK), the fourth-largest economy in Asia grew by 0.7 percent between April and June, up from 0.6 percent the previous quarter.
The expansion, which beat market expectations, translated into 2.9 percent year-over-year increase as opposed to 3 percent during the previous quarter.
After announcing an unprecedented 0.5 percentage point boost earlier this month, the central bank is likely to be encouraged to continue raising the benchmark rate in the upcoming months as a result of the faster-than-expected growth.
Inflation in South Korea reached 6% in June, the highest level since the Asian financial crisis in November 1998.
Private spending in South Korea increased significantly as a result of relaxed social isolation policies, while exports and corporate investment declined as the slowing Chinese economy, the conflict in the Ukraine, and rising global interest rates slowed GDP.
The largest decline in exports in two years occurred between April and June, while capital investment decreased by 1%.
Source: Al Jazeera
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