Latest news with #ChoYong-gu
Straits Times
24-07-2025
- Business
- Straits Times
South Korea posts fastest economic growth since early 2024 as Trump tariffs loom
Find out what's new on ST website and app. South Korea's exports jumped the most in nearly five years, led by semiconductors. - South Korea's economy grew at the fastest pace in more than a year in the second quarter, surpassing market expectations, buoyed by rebounding consumer spending and a surge in exports driven by demand for technology. The upbeat growth data could give the Bank of Korea (BOK) more policy space, economists said, after it left interest rates unchanged this month but signalled the possibility of a cut in the next three months due to uncertainty from US tariffs. 'The BOK will have to raise its economic forecast for sure next month and it will provide more time to assess data on the financial stability front, which lowers the possibility of an August rate cut,' said Cho Yong-gu, an economist at Shinyoung Securities. Gross domestic product expanded a seasonally adjusted 0.6 per cent in the April-June period from the prior quarter when it contracted 0.2 per cent, advanced estimates showed on July 24. It was stronger than the median 0.5 per cent increase forecast in a Reuters poll and the fastest quarterly growth since the first quarter of 2024. The rebound comes as President Lee Jae Myung, who took office in June after a snap presidential election, made economic recovery a top priority. He introduced a supplementary budget, including a consumer voucher programme, to counter trade challenges and tepid consumption. South Korea held a snap presidential election on June 3, after the constitutional court in early April upheld former President Yoon Suk Yeol's impeachment over his failed martial law order, ending six months of political uncertainty. 'The rebound in consumer spending was the brightest spot,' Lee Jeong-hoon, an economist at Eugene Investment Securities, said. He expects stronger momentum in the second half, bringing annual growth above the central bank's May forecast of 0.8 per cent. 'Although exports will weaken, it won't be that severe, if the outcome of the trade negotiations is similar to that of Japan,' Mr Lee said. In the second quarter, private consumption rose 0.5 per cent over the quarter on improving consumer sentiment and a stock market rally, while construction and facility investments each fell 1.5 per cent. Exports jumped 4.2 per cent, led by semiconductors, after falling 0.6 per cent in the previous quarter amid US tariff uncertainty. It was the strongest quarterly performance since the third quarter of 2020. 'In the second quarter, the impact of tariffs was limited as semiconductor exports remained robust and front-loading increased ahead of the imposition,' a BOK official told a press conference, adding that tariffs would start to weigh in the third quarter. US President Donald Trump's 25 per cent 'reciprocal' tariffs against the trade-reliant economy introduced in early April are currently paused until Aug 1 for trade negotiations, while US-bound shipments in industries such as autos and steel have been hit by high product-specific tariffs. Year on year, Asia's fourth-largest economy grew 0.5 per cent in the second quarter, compared with no growth in the first quarter and a 0.4 per cent expansion expected by economists. REUTERS
Yahoo
23-06-2025
- Business
- Yahoo
Korea's Early Exports to US Jump Ahead of Tariff Deadline
(Bloomberg) -- South Korea's early trade data for June showed the biggest rise in exports to the US so far this year, indicating that manufacturers may have rushed shipments ahead of a July deadline that will see broad tariffs rates more than double. Bezos Wedding Draws Protests, Soul-Searching Over Tourism in Venice One Architect's Quest to Save Mumbai's Heritage From Disappearing NYC Congestion Toll Cuts Manhattan Gridlock by 25%, RPA Reports The value of shipments to the US rose 4.3% in the first 20 days of June from a year earlier, customs data showed Monday. It was the first increase since March, and it marked a rebound after a 8.1% drop in US-bound shipments in the full month of May. Imports rose 4.8%, while the trade surplus came to about $3 billion. As with other nations, South Korea faces sectoral tariffs on autos, steel, aluminum and semiconductors. An across-the-board 10% tariff on other South Korean goods is set to increase to 25% on July 9 after a three-month grace period expires. 'It does look like there was front-loading during the grace period, likely driven by pre-buying ahead of the US tariffs,' said Cho Yong-gu, a fixed-income strategist at Shinyoung Securities. 'I am, however, concerned about the sustainability of this trend — I expect a slowdown in the second half of this year.' The rebound in Korean shipments to the US is likely to be short-lived. President Lee Jae Myung, who took office earlier this month, has yet to make meaningful progress in trade negotiations. A planned meeting with President Donald Trump on the sidelines of last week's Group of Seven summit in Canada was called off at the last minute. The trade figures add to signs of a temporary recovery in regional demand. Japan's manufacturing PMI climbed back into expansion in June, rising to 50.4, the highest since May 2024, S&P Global said Monday. The rebound may also offer modest support for Korea's intermediate goods exports to Asia. South Korea's overall value of shipments rose 8.3% in the first 20 days of June, the biggest jump since August 2024, the customs data showed. Imports rose 5.3%, resulting in a trade surplus of $2.62 billion. The elevated tariff rate on South Korean goods would represent one of the steepest trade penalties imposed on US allies. On top of that, the sectoral duties will further strain the country's export-dependent industries. Last Friday, the Bank of Korea reported that South Korea's current account surplus with the US surged to a record high last year, adding pressure on President Lee as he seeks to secure a trade deal with Washington. Trade Minister Yeo Han-koo departed on Sunday for meetings with his counterparts in Washington, Yonhap News reported. In Monday's data, semiconductors, South Korea's largest export, posted a 21.8% increase, while automobile shipments climbed 9.2%. Steel exports showed a modest 1.6% increase, remaining weak under the pressure of the 50% US tariff. Outbound shipments to China slipped 1%, while imports gained 3.4%. Exports to Vietnam recorded a 4.3% decline, whereas shipments to the European Union surged by 24%. The trade data come after the Finance Ministry announced a 30.5 trillion won ($22.2 billion) supplementary budget to help revive an economy hit by weak consumption and external trade shocks. The package includes 15.2 trillion won in stimulus, 5 trillion won for supporting livelihoods like small businesses and 10.3 trillion won to offset a revenue shortfall in the current budget. The extra budget will be financed through a combination of spending cuts and additional debt issuance, lifting the debt-to-gross domestic product ratio to 49% this year. Policymakers are seeking to balance economic support with fiscal sustainability, while also navigating heightened trade tensions. The BOK pivoted to a monetary easing cycle last October, and has since cut its benchmark rate to 2.5%. The bank lowered its growth forecast for the year to 0.8% and said further easing may be on the table depending on conditions in the second half. With a new government in place and fiscal tools being deployed, attention remains on whether export momentum can recover, and whether a breakthrough with the US can be made before the tariff relief expires. (Updates with other details including economist's comments.) Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros The US Has More Copper Than China But No Way to Refine All of It Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
