South Korea’s economy is expected to have grown by 0.6% last quarter, according to a Reuters poll of economists. Despite weakened household consumption, the country’s trade-dependent economy saw a boost in export performance last quarter, particularly in the semiconductor sector. This indicates positive global trade health and supports increasing global demand for semiconductors.
On a year-on-year basis, GDP is projected to have expanded by 2.4% last quarter, faster than the 2.2% growth in the previous quarter. However, uneven growth in China, South Korea’s largest trading partner, could impact the ongoing recovery. Furthermore, the country’s high level of debt has led to subdued growth, with interest rate hikes by the Bank of Korea restricting spending.
Despite these challenges, South Korea’s economy is showing signs of resilience and potential for further growth in the future. The Bank of Korea has indicated that it will only consider lowering borrowing costs once inflation moves towards its 2% target. With inflation at 3.1% in March, the pressure on consumption is likely to continue. However, manufacturing and exports have remained strong and are supported by increasing global demand for semiconductors.
