South Korea’s economy is expected to have grown by 0.6% in the last quarter, according to a Reuters poll of economists. This growth rate is the same as the previous three months, and it was attributed to improving exports offsetting weakening household consumption. Despite weak consumer demand, the manufacturing and export sectors are expected to remain robust, with year-on-year GDP growth forecasted at 2.4% for the last quarter. However, there are concerns about uneven growth in China, which could impact the ongoing recovery.
South Korea’s economy has been subdued due to interest rate hikes by the Bank of Korea (BOK) since August 2021, making it one of the most indebted economies in the world. The central bank has stated that it needs to see inflation moving towards its target of 2% before considering lowering borrowing costs. In March, inflation was reported at 3.1%, which will continue to put pressure on already slowing consumption. These factors will shape South Korea’s economic outlook in the near future.
