South Korea’s growth improves on better consumption

On a year-over-year basis, the economy grew 3.2% in the second quarter following a revised 2.8% gain in the previous three-month period. Imports gained 1.9 percent, mainly on increases in crude oil and automobiles. Sales tax cuts on purchases of passenger cars expired at the end of June, she said in a research note.

South Korea’s economy grew 0.7 per cent in April-June over the previous quarter, the central bank estimated on Tuesday, accelerating modestly from the previous three-month period as domestic consumption and capex improved. The gross domestic income adding net income from overseas in the second quarter fell 0.4 percent in the second quarter, the first fall since the first quarter of 2011. Construction spending was robust thanks to an increase in new houses. Growth in the first half of the year was in line with central bank projections, Kim said.

The government last week announced an 11 trillion won ($9.7 billion) supplement to its government spending as part of a comprehensive fiscal stimulus package valued at about 28 trillion won to support the lackluster economy.

Bank of Korea trimmed its benchmark interest rate last month to a record low of 1.25 percent, the first rate cut in one year.

On the other hand, the anti-corruption law to be enacted in September became a matter of economic concern for the policy makers while planning to implement monetary stimulus.

Insiders said South Korea’s Finance Minister Yoo Il-ho and his Japanese counterpart Taro Aso are expected to exchange views on the current trend of the global financial market in the aftermath of Brexit, or the British vote to leave the European Union. The law restricts gifts a public official, teacher or a journalist can accept. The exact price limit and appropriateness of the gift is still being debated.

After falling for an 18th consecutive month in June, South Korea’s exports are set for another drop in July, based on preliminary figures by the customs office.

The BOK and the government now estimate this year’s GDP growth at 2.7 percent and 2.8 percent, respectively. Intellectual property products investment added 1.1 percent, centering on software investment.