South Korea’s economy exceeded the second quarter’s estimates as relaxation in imposed restrictions to curb the infection rebooted consumption, also, increasing chances of interest rate hikes to rein zooming prices.
The country’s economy expanded 0.7 percent between the April-June quarter, slightly up from 0.6 percent the previous quarter, Bank of Korea (BOK) data showed.
The economy grew 2.9 percent year on year. It was 3 percent during the previous quarter. The figure above the 0.4% increase predicted in a Reuters survey.
The unanticipated positive expansion will bolster the central bank’s confidence in hiking the benchmark rate in the coming months after announcing a 50 bps point hike earlier this month.
According to Min Joo Kang, senior economist for South Korea and Japan at ING, the wider-than-expected expansion would give the BOK “some relief that it can focus on its inflation-targeting mandate for the time being,” reported Aljazeera.
Kang said she sees the Bank Of Korea ( BOK) introducing two .25 percentage point hikes in August and October, taking the interest rates to 2.75 percentage points.
Inflation in South Korea touched the highest level in the last twenty years at 6 percent in June.
Exports slid 3.1 percent in the April-June quarter, the biggest fall since 2020, while capital investment declined 1 percent.