South Korea's Q2 GDP beats estimates on chip export boom
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FILE PHOTO: A view shows Samsung Electronics' chip production plant at Pyeongtaek, South Korea, in this handout picture obtained by Reuters on September 7, 2022. Samsung Electronics/Handout via REUTERS /File Photo
By Cynthia Kim
SEOUL, July 23 (Reuters) - South Korea's economy grew faster than expectations in the second quarter, driven by a semiconductor export boom that offset a decline in construction investment, advance estimates from the Bank of Korea showed on Thursday.
Gross domestic product expanded 0.6% in the April-June period from a quarter earlier on a seasonally adjusted basis, faster than a median estimate of 0.4% from a Reuters poll.
The result marks a sharp deceleration from the blistering 1.8% growth of the first quarter, but suggests chip-led growth can keep the economic engine running as policymakers embarked on a tightening cycle with a 25-basis-point hike in July.
"As long as we see quarterly (growth) rate that is higher than minus 0.1% in the second half, on an average, it would be possible to see annual growth of 3%" this year, a BOK official said in a news conference.
The central bank in May raised this year's growth outlook to 2.6%, which is due to be revised in August.
With the headline inflation figure at a 2-1/2-year high in South Korea, a majority of analysts see the central bank delivering at least one more rate hike before the end of the year to take the policy rate to 3.00%.
The BOK is expected to raise its key rate to 3.25% in the first quarter of 2027 and keep it there until at least the end of next year, according to median forecasts in a Reuters poll.
On a year-on-year basis, GDP expanded 3.7%, also beating a median estimate of 3.5%.
Growth was driven by a 1.4% gain in exports from a quarter earlier, led by shipments of "semiconductors, machineries and equipment," the central bank said.
Private consumption expanded 0.4%, while construction investment declined 0.2% from the first quarter.
(Reporting by Cynthia Kim; Editing by Jacqueline Wong)
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