South Korea’s economy expected to come to a halt in the third quarter

  • Q3 GDP up 0.1% from the previous quarter, up 2.8% year on year
  • GDP data due at 8 a.m. local Thursday (2300 GMT Wednesday)

BENGALURU, Oct 25 (Reuters) – South Korea’s economy likely slowed in the third quarter as weaker exports and rising interest rates ended what had been a resilient run, according to a Reuters poll. from economists.

According to median forecasts from 21 economists, the export-led economy is expected to have grown by a seasonally adjusted 0.1% in the last quarter, a sharp slowdown from quarterly growth of 0.7% in April-June.

Three economists predicted an outright contraction and two expected the economy to stagnate.

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On an annual basis, gross domestic product (GDP) likely rose 2.8%, according to the median forecast of 22 economists surveyed Oct. 20-24, from 2.9% in the second quarter.

The data will be released on October 27.

“GDP growth is likely to have been slower in 3Q22 compared to 2Q22, mainly due to slowing consumption. Weakness in exports and manufacturing output is expected to have continued amid deteriorating outlook global economies,” noted economist Oh Suktae. at Societe Generale.

“GDP growth is expected to remain sluggish, at least in the near term, as consumption growth normalizes after the post-pandemic recovery and export and investment environments are expected to remain weak.”

Exports from Asia’s fourth-largest economy grew at the slowest pace in nearly two years in September and are expected to weaken further amid growing fears of a global recession and an economic slowdown in China, the biggest country’s trading partner.

This, combined with aggressive interest rate hikes by the Bank of Korea (BOK) to curb inflationary pressures that have reached the peak of the decade, will weigh on the economy. In October, the BOK raised its policy rate by 50 basis points to 3.00%.

The central bank has raised rates by a cumulative 250 basis points already in this cycle.

“Looking ahead, the weakening export outlook, high domestic inflation, rising debt service and policy tightening all point to intensifying headwinds to growth,” Bansi said. Madhavani, senior economist at ANZ.

According to another Reuters poll, growth is expected to average 2.6% this year and slow to 1.9% next year.

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Reporting by Devayani Sathyan Polling by Veronica Khongwir Editing by Mark Potter

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