Korea’s Economic Growth Rate Below 1%

Korea’s second quarter GDP has grown only by 0.8 percent from the first quarter. It is the first time that the GDP growth rate has been below 1 percent since the fourth quarter of 2004 and the first quarter of 2005.

The Bank of Korea said Friday that the real GDP in the second quarter rose by 4.8 percent year-on-year and 0.8 percent compared to the first quarter of this year.

The year-on-year economic growth figure has dropped from 5.8 percent in the first quarter to 4.8 percent in the second quarter and the second quarter rate was below 1 percent following the first quarter’s 0.8 percent.

The Bank of Korea predicted in its economic outlook for the second half of this year that the GDP growth rate would increase 1.0 percent compared to the previous quarter and 5 percent year-on-year.

With inflation triggered by soaring international oil prices, subdued domestic consumption, and decreasing construction investment, economic growth has clearly slowed down. Domestic consumption decreased by 0.1 percent compared with the previous quarter, which is the first negative growth in four years since the second quarter of 2004 (-0.1 percent).

Meanwhile, the GDI, which indicates income level, rose 1.6 percent in the second quarter from the first thanks to better trading conditions due to the price rise in exporting goods including petroleum products and vessels.

parky@donga.com