Roundup: S. Korea's Q2 GDP growth stays low amid uncertainties

South Korea's gross domestic product (GDP) posted the highest expansion in three quarters, but it stayed at a low level for three quarters in a row on uncertainties at home and abroad, central bank data showed on Friday.

Seasonally adjusted GDP reached 375.33 trillion won (335.7 billion U.S. dollars) in the April-June period, up 0.8 percent from the previous three-month period, according to the Bank of Korea (BOK).

It was up from a 0.5 percent expansion in the first quarter, marking the highest growth since 1.2 percent tallied in the third quarter of last year.

The growth rate, however, stayed below 1 percent for the third consecutive quarter, bolstering worries about delayed recovery amid uncertainties at home and abroad.

After peaking at 6.5 percent in 2010, the country's growth continued to slide to 3.7 percent in 2011 and 2.3 percent in 2012. It rebounded to 3.3 percent in 2014, but it turned downward at 2.6 percent in 2015.

The BOK predicted South Korea's economic growth at 2.7 percent in 2016 and 2.9 percent in 2017. The country's growth potential is estimated at a range of between 3.0 percent and 3.2 percent.

Concerns remained over a prolonged low growth trend on the back of massive household debts and the fast-aging population that restrict private consumption. A global trade is still weak, pulling down overseas shipments of the export-driven economy.

The ongoing government-led restructuring process in troubled shipbuilding and shipping industries hit hardest the economy in southeastern South Korea where major ports and shipyards are located.

Three major shipbuilders, including Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering, had submitted their respective reorganization plans to the government, pledging to cut workforce by 30 percent and reduce overcapacity by 20 percent by the end of 2018.

Hanjin Shipbuilding, the country's largest container shipping line, filed for court receivership on Wednesday as its creditors refused to provide further funding on falling orders and lower freight rates that increased the shipper's already massive debts.

The government unveiled 11 trillion won of supplementary budget plan for the second half of this year, but it has yet to be passed through the National Assembly.

Expectations for the BOK's further rate cut got lower as the U.S. Federal Reserve is forecast to raise interest rates at least once within this year. The BOK lowered its policy rate by 25 basis points in June to an all-time low of 1.25 percent.

Production among manufacturers rose 1.2 percent in the second quarter from three months earlier as output of mining, chemical and oil products increased on a slight rebound in crude oil prices.

Construction production gained 1.0 percent in the second quarter, lower than a 4.8 percent expansion in the first quarter. Services industry output grew 0.6 percent in the three months ending June 30.

Private consumption rose 1 percent in the second quarter on the back of a temporary cut in consumption taxes. It was a rebound from a 0.2 percent decline in the first quarter, but worries remained as the rebound came mainly from policy effects.

Investment in the construction sector increased 3.1 percent in the second quarter from the previous quarter, and facility investment expanded 2.8 percent on demand for transport equipment and machinery.

Exports, which account for about half of the economy, increased 1.1 percent on demand for locally-made chips and oil products. Imports added 2.1 percent on demand for foreign luxury cars.

Domestic demand contributed to the second-quarter growth by 1.2 percentage points, while net exports pulled it down by 0.3 percentage points.

GDP deflator rose 1.5 percent in the second quarter from a year earlier, while the gross savings rate declined 0.7 percentage points to 35.5 percent on rising private consumption.

Gross national income (GNI) declined 0.4 percent due to a rebound in global oil prices and an increase in corporate dividend payments. It was the first quarterly reduction in seven quarters. Endit