South Korea’s economic growth accelerated on the back of a pickup in manufacturing, offering a sign of resilience as the central bank keeps monetary policy restrictive.
Gross domestic product advanced 0.6% in the three months through June from the previous quarter, Bank of Korea data showed Tuesday. Economists surveyed by Bloomberg forecast a 0.5% expansion after the 0.3% advance in the previous period.
The economy has now advanced for a second quarter since contracting in the last three months of 2022. The BOK has kept its key interest rate steady, with a hawkish bias, for most of this year as it seeks to balance its inflation fight with the need to safeguard economic activity.
The latest expansion gives the BOK scope for keeping policy tight as the US Federal Reserve is widely expected to hike rates by a quarter point on Wednesday, widening the rate differential between the new two nations.
After being buffeted by an export slump since last year, Korea last month posted its first trade surplus in 16 months. Consumer confidence also breached the threshold of 100, indicating that optimism has returned among households.
But uncertainties about the strength of momentum remain. Early trade data showed exports in July falling at the fastest clip since March, and uncertainties remain over the timing of any potential rebound in the key chip sector and a recovery of demand in China, Korea’s biggest trading partner. Both the central bank and government recently slashed their growth forecasts for the year to 1.4%.
