S Korea economy seen wrestling slow growth
Serious slump: Pedestrians walk at a shopping district in Seoul. South Korea's economy slowed substantially in the second quarter as a result of weakened domestic demand. Picture: AFP
Saturday, July 26, 2008
SOUTH KOREA'S economy slowed sharply in the three months to June, official figures showed yesterday, amid warnings of a slump that could further test President Lee Myung-Bak's sagging popularity.
Growth slowed below forecast to an annual rate of 4.8 per cent in the second quarter from 5.8 per cent in the three months to March, the Bank of Korea said, as soaring oil prices pushed up inflation and weakened domestic demand.
South Korea is among Brunei Darussalam's top markets for its oil and gas exports.
"Because of high prices and the jobless rate, domestic consumption weakened in the second quarter, weighing down on the growth momentum," said Choi Chun-Sin, a director of the bank.
The latest growth figure is the lowest since early 2007 and comes as a US-led global slowdown and rising inflation weigh on Lee's election pledge to revitalise one of Asia's largest economies.
The pledge to raise annual growth to seven per cent swept him to a thumping election victory in December, but protests over parts of his economic policy and presidential style have since badly hit his popularity.
The soaring price of oil and raw materials took inflation to a 10-year high of 5.5 per cent in June, the central bank said, above its earlier forecast of 4.8 per cent.
Private consumption dipped 0.1 per cent in the second quarter, compared with a 0.4 per cent gain in the three months to March, the figures showed, as overall quarterly economic growth remained at 0.8 per cent.
Choi said exports which account for about 40 per cent of the value of South Korea's economy had remained strong. They grew 3.7 per cent over the second quarter, having declined 1.8 per cent over the three months to March.
Experts said the slowdown in domestic demand in the wake of rising inflation and falling stock and property prices had been faster than expected.
"Weakness in private consumption is more serious than expected earlier," Hyundai Research Institute executive director Yu Byoung-Gyu said, adding it accounted for about half the South Korean economy.
"Thanks to brisk exports, the economy was able to sustain growth in the first half. However, the economy would face a serious slump in the latter half unless private consumption stages a recovery," he said.
Samsung Economic Research Institute economist Kwon Soon-Woo said private consumption had entered "a sluggish phase."AFP
Growth slowed below forecast to an annual rate of 4.8 per cent in the second quarter from 5.8 per cent in the three months to March, the Bank of Korea said, as soaring oil prices pushed up inflation and weakened domestic demand.
South Korea is among Brunei Darussalam's top markets for its oil and gas exports.
"Because of high prices and the jobless rate, domestic consumption weakened in the second quarter, weighing down on the growth momentum," said Choi Chun-Sin, a director of the bank.
The latest growth figure is the lowest since early 2007 and comes as a US-led global slowdown and rising inflation weigh on Lee's election pledge to revitalise one of Asia's largest economies.
The pledge to raise annual growth to seven per cent swept him to a thumping election victory in December, but protests over parts of his economic policy and presidential style have since badly hit his popularity.
The soaring price of oil and raw materials took inflation to a 10-year high of 5.5 per cent in June, the central bank said, above its earlier forecast of 4.8 per cent.
Private consumption dipped 0.1 per cent in the second quarter, compared with a 0.4 per cent gain in the three months to March, the figures showed, as overall quarterly economic growth remained at 0.8 per cent.
Choi said exports which account for about 40 per cent of the value of South Korea's economy had remained strong. They grew 3.7 per cent over the second quarter, having declined 1.8 per cent over the three months to March.
Experts said the slowdown in domestic demand in the wake of rising inflation and falling stock and property prices had been faster than expected.
"Weakness in private consumption is more serious than expected earlier," Hyundai Research Institute executive director Yu Byoung-Gyu said, adding it accounted for about half the South Korean economy.
"Thanks to brisk exports, the economy was able to sustain growth in the first half. However, the economy would face a serious slump in the latter half unless private consumption stages a recovery," he said.
Samsung Economic Research Institute economist Kwon Soon-Woo said private consumption had entered "a sluggish phase."AFP
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