After more than a year of moderate expansion, South Korea's economic growth nearly stalled last quarter. Despite strong exports, higher borrowing costs have dampened domestic demand, according to a Reuters survey of economists.
According to the median forecast of 21 economists, the export-led economy's seasonally adjusted quarter-on-quarter growth in the second quarter is estimated at 0.1%, a significant slowdown from the 1.3% growth recorded from January to March.
Seven economists predict that the economy will contract, while two expect it to stagnate. If the median forecast materializes, it would mark the slowest growth since the end of 2022.
On an annual basis, the gross domestic product (GDP) is expected to grow by 2.5%, according to the median forecast of 25 economists surveyed from July 15 to 22, compared to the 3.3% growth in the first quarter.
The data will be released on July 25.
ANZ economist Krystal Tan noted, "We expect the GDP data to show near-stagnant growth after strong expansion in the first quarter of 2024. Despite high-frequency data showing continued strength in exports and manufacturing, these likely offset by weak domestic demand."
Since reopening after the COVID-19 pandemic, Asia's fourth-largest economy has relied mainly on exports for growth, while domestic demand has remained subdued due to consumers facing high borrowing costs.
Household debt levels in South Korea rank among the highest globally.
