Korea: Revised data confirm economy grew in Q2 at weakest rate in over two years
September 3, 2015
In the second quarter, GDP expanded 2.2% over the same period last year, according to revised data provided by the Bank of Korea. The result was unchanged from the advance estimate but marked a deceleration from the 2.5% increase registered in the first quarter. Moreover, the growth tallied in Q2 was the weakest result since Q1 2013. The outbreak of the Middle East Respiratory Syndrome (MERS) appears to have weighed less on the economy in Q2 that initially feared although losses in the external sector placed a significant burden on growth.
The slowdown in economic activity reflects that a deterioration in the external sector more than offset an improvement in the domestic sector. Private consumption picked up from a 1.6% increase in Q1 to a 1.7% rise in Q2. Government spending accelerated from a 3.1% expansion in Q1 to a 3.3% increase in Q2. Fixed investment grew 2.4% for a second straight period in Q2.
On the external front, exports of goods and services dropped from a 0.1% rise in Q1 to a 0.8% contraction in Q2, which marked the weakest result in six years. Imports slowed from a 1.9% expansion in Q1 to a 1.4% increase in Q2. As a result, the external sector’s net contribution to overall economic growth deteriorated from minus 0.9 percentage points in Q1 to minus 1.2 percentage points in Q2.
A quarter-on-quarter comparison showed that GDP increased a seasonally-adjusted 0.3% in Q2, which was down from the 0.8% increase tallied in Q1. This figure was also unchanged from the preliminary estimate.
Author: Carl Kelly, Economist