S.Korea Q1 GDP growth slows, China risks cloud outlook
By Jihoon Lee
SEOUL (Reuters) -South Korea’s financial progress practically halved within the first quarter from the previous three months on coronavirus curbs and surging inflation, whereas a slowing Chinese language financial system clouded the outlook for the approaching months.
Gross home product grew a seasonally-adjusted 0.7% within the first quarter from the final quarter of 2021, preliminary information from the Financial institution of Korea (BOK) confirmed on Tuesday, slowing from 1.2% 1 / 4 earlier, however simply beating 0.6% progress seen in a Reuters survey.
“Home consumption will rebound as home COVID-19 curbs had been principally lifted, however China’s slowdown would severely hit exports and the general financial system within the present quarter,” mentioned Park Sang-hyun, economist at HI Funding & Securities.
South Korean shares and the gained forex opened with modest beneficial properties after the info.
The information comes as a senior Worldwide Financial Fund (IMF) official warned on Tuesday Asia faces a “stagflationary” outlook with probably downgrades to progress projections and surging value pressures.
Non-public consumption shrank 0.5%, the worst contraction in 5 quarters, as the federal government enforced social distancing restrictions to curb a surge in Omicron coronavirus instances.
Capital funding fell 4%, the quickest decline in three years, whereas development funding misplaced 2.4%.
From a 12 months earlier, the financial system grew 3.1%, in contrast with economists’ forecast for two.8% progress.
The BOK is anticipated to revise down this 12 months’s progress forecast from the present 3% estimate in its subsequent evaluate in Could, because the nation faces headwinds from the Ukraine struggle, U.S. financial coverage tightening and COVID-19 lockdowns in China.
New BOK governor Rhee Chang-yong mentioned final week financial progress is anticipated to weaken farther from earlier projections and that financial coverage would want to handle dangers to progress and the threats from inflation.
In a separate Reuters ballot, South Korea’s financial system was forecast to develop 2.8% this 12 months and a pair of.6% in 2023 after increasing at an 11-year excessive of 4% in 2021.
The BOK this month raised its benchmark price to 1.50%, the very best since August 2019 in a shock transfer because it ramped up the battle in opposition to inflation.
The IMF not too long ago lowered its 2022 progress projection for the nation to 2.5% from 3.0% whereas upgrading its inflation projections to 4.0% from 3.1%.
(Reporting by Jihoon Lee, Cynthia Kim, Choonsik Yoo; Enhancing by Sam Holmes)
