South Korea's economy is growing at a slower-than-expected rate, with weak investment and falling exports compared with the previous quarter suggesting some vulnerabilities even before the country's worst COVID-19 epidemic in recent weeks.
Data released by the central bank of Korea on Tuesday showed that gross domestic product grew 0.7 per cent from the previous quarter from April to June, below economists' consensus expectations of 0.8 per cent growth. The economy is still growing by 5.9% from its low level in the same period last year.
The slowdown is particularly worrying given the renewed surge in South Korean cases since July, as it bodes well for even more lacklustre results in the current quarter. Well over 1000 daily infections have forced the government to put half the population on semi-lockdown, while vaccine shortages are delaying vaccination operations.
At its policy meeting earlier this month, the central bank said it still expected the economy to grow by 4% this year, as the new risks posed by the epidemic were offset by resilient exports and more government spending.
The disappointing GDP results make it less likely that economic growth will meet the Bank of Korea's forecast in 2021, which could delay the rate hike that central bank governor Lee Chu-lie is considering.