View across the Hangang River in Seoul, South Korea.
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South Korea avoided a technical recession as its economy expanded 0.6% from the previous quarter, according to advance estimates, beating expectations.
This was higher than the 0.5% expected by economists polled by Reuters, and a reversal from the 0.2% contraction seen in the first quarter.
On a year-over-year basis, the country’s GDP rose 0.5%, up from 0% in the first quarter and a 0.4% expansion expected by economists in a Reuters poll.
Exports of both goods and services grew strongly in the second quarter, rising 4.2% quarter over quarter as shipments of semiconductors, petroleum products, and chemical products increased. This is compared to the 0.6% contraction seen in the previous quarter.
South Korea is currently trying to close a trade deal with the U.S., failing that, the country’s exports to the U.S. would be hit with a 25% tariff from August 1.
Exports of goods and services make up about 44% of South Korea’s GDP in 2023, according to the latest figures from the World Bank, with the U.S. as its second-largest export market.
South Korean media outlet Yonhap reported that Seoul has ruled out changes to beef and rice imports as bargaining chips in tariff negotiations with the United States.
The BOK held rates in its previous monetary policy meeting on July 10, despite noting a stable inflation rate and forecasting low growth for the country, choosing to focus on financial stability.
Inflation in South Korea stood at 2.2% in June, just slightly above the BOK’s 2% target.
—This is breaking news, please check back for updates.