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Roundup: S. Korea's economy slows in Q2 on MERS shock, weak exports

Xinhua, July 23, 2015 Adjust font size:

South Korea's economy slowed in the second quarter due to the outbreak of the Middle East Respiratory Syndrome (MERS), weak exports and drought, central bank data showed Thursday.

Real gross domestic product (GDP) expanded 0.3 percent during the April-June period compared with the prior three-month period, according to the Bank of Korea (BOK). The economy recorded a zero- percent growth for five straight quarters.

It was lower than 0.4 percent, which the BOK suggested as its estimate last month. The bank froze the benchmark interest rate at an all-time low of 1.5 percent in July after lowering it by a quarter percentage point in March and June respectively.

The BOK revised down its 2015 growth outlook for the economy by 0.3 percentage points to 2.8 percent in June on the back of the MERS outbreak.

Thirty-six people died of the MERS corona virus, which infected a total of 186 people. No new case of contagion has been reported in the past 18 days, indicating the MERS crisis nearing to an end.

Consumers refrained from entertainment and social gatherings for the MERS fears. Some shunned even going for shopping, and many people on the street wore facial masks, refraining from going to public venues crowded with people.

The quarterly growth of GDP reduced from 0.8 percent in the first quarter to 0.3 percent in the second quarter. It fell from 0. 8 percent in the third quarter of last year to 0.3 percent in the fourth quarter.

From a year earlier, the real GDP expanded 2.2 percent in the second quarter after growing 2.5 percent in the first quarter.

Private consumption slid 0.3 percent in the second quarter from three months earlier, posting the lowest gain in a year. Facility investment rose 0.4 percent on demand for transport equipment, and construction investment grew 1.7 percent.

Exports, which account for about half of the economy, inched up 0.1 percent in the second quarter from the prior quarter. On a yearly basis, the exports reduced for six straight months to June.

Production in the agricultural sector tumbled 11.1 percent due to the long spell of dry weather, which made great contributions to higher farm goods prices. It marked the first decline in about a year.

Service industry production moved up 0.1 percent in the second quarter after growing 0.9 percent in the previous quarter.

To boost the sluggish economy, the government unveiled a stimulus package for the second half worth about 22 trillion won ( 19 billion U.S. dollars), including an 11.8 trillion-won supplementary budget. The extra budget had yet to be approved through parliament. Endi