South Korea avoids technical recession as GDP expands 0.6% in second quarter
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This was higher than the 0.5% expected by economists polled by Reuters, and a reversal from the 0.2% contraction seen in the first quarter.
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investment
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July 24, 2025
01:15 AM
CNBC
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The analysis indicates that Interestingly, Interestingly, This was higher than the 0. 5% expected by economists polled by Reuters
It's also a reversal from the 0
Additionally, 2% contraction seen in the first quarter
On a year-over-year basis, the country's GDP rose 0, in today's market environment. 5%, up from 0% in the first quarter
On the other hand, Nevertheless, View across the Hangang River in Seoul, South Korea
Universal History | Universal Images Group | Getty ImagesSouth Korea avoided a nical recession as its economy expanded by 0
Additionally, 6% from the previous quarter, beating expectations, according to advance estimates
Additionally, This was higher than the 0. 5% expected by economists polled by Reuters, and a reversal from the 0, in this volatile climate
Conversely, 2% contraction seen in the first quarter
However, On a year-over-year basis, the country's GDP rose 0 (remarkable data). 5%, up from 0% in the first quarter and higher than a 0
Conversely, 4% expansion expected by the Reuters poll
Data from the Bank of Korea showed exports of both goods and services grew strongly in the second quarter, rising 4. 2% quarter over quarter as shipments of semiconductors, petroleum ducts, and chemical ducts increased (which is quite significant). "Net exports were the principal driver of growth," Louise Loo, Head of Asia Economics at Oxford Economics, said in a note ing the data release, amid market uncertainty
Loo noted that export volumes rose at their fastest pace since the third quarter of 2020, as firms expedited shipments ahead of anticipated adjustments to U (fascinating analysis)
However, Furthermore, Trade policy, in particular, tariffs, given current economic conditions
Moreover, Shivaan Tandon, economist at Capital Economics, said that South Korea's externally facing sectors, such as trade, are ly to struggle as global trade growth softens under the specter of tariffs. "While demand for AI-related hardware could continue to support semiconductor exports, we think other parts of the export basket will come under pressure," he adds (something worth watching)
On the other hand, South Korea is currently trying to close a trade deal with the U. , failing that, the country's exports to the U
Would be hit with a 25% tariff from August 1 (fascinating analysis)
On the other hand, On Thursday, South Korea's finance ministry reportedly said that talks with the U
However, Were cancelled after U
Treasury Secretary Scott Bessent, who has been leading tariff negotiations for the Trump administration, had a scheduling conflict, according Reuters (quite telling)
The report added that Bessent would hold a meeting with South Korean Finance Minister Koo Yun-cheol "as soon as possible. "Exports of goods and services make up 44% of South Korea's GDP in 2023, according to the figures from the World Bank, with the U (remarkable data)
As its second-largest export market
South Korean media outlet Yonhap reported that Seoul has ruled out changes to beef and rice imports as bargaining chips in tariff negotiations with the United States, in today's market environment
Domestic headwindsOn the domestic front, South Korea's total consumption, which includes private and government expenditure, increased 0, in this volatile climate
On the other hand, 7% from the previous quarter, a stronger showing compared to the 0. 1% contraction seen in the first three months of the year
Government expenditure, which rose 1
Nevertheless, 2% quarter over quarter, was mostly powered by an increase in healthcare benefits, while private expenditure, which increased by 0 (an important development)
Additionally, 5% in the same period, was driven by increased spending on motor vehicles, as well as recreation and sporting activities
Oxford Economics' Loo said while domestic demand has seen a turnaround, due to early effects of the country' supplementary budget, private consumption growth was outweighed by a slowdown in the construction and equipment investment sectors
Additionally, Capital Economics' Tandon also agreed, adding that the "pace of growth is unly to last. " While government spending should support growth in the near term, thanks to the passage of two supplementary budgets this year, the boost from government spending is ly to be offset by drags from elsewhere, Tandon added (an important development), given the current landscape
Given this, Oxford Economics expects South Korea's full-year GDP to expand just 0
Furthermore, 8% year over year in 2025, marking the slowest annual pace since 2020, which may nudge the BOK to cut rates
Moreover, The BOK held rates in its previous monetary policy meeting on July 10, despite noting a stable inflation rate and forecasting low growth for the country, choosing to focus on financial stability
Inflation in South Korea stood at 2
Furthermore, 2% in June, just slightly above the BOK's 2% target, given the current landscape.
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