BENGALURU, Oct 25 (Reuters) – South Korea’s economic system probably slowed to a close to halt within the third quarter as weakening exports and rising rates of interest knocked the wind out of what had been a resilient run, a Reuters ballot of economists discovered.
The export-led economic system was anticipated to have expanded a seasonally-adjusted 0.1% final quarter, in response to the median forecast of 21 economists, a pointy slowdown from the 0.7% quarterly progress in April-June.
Three economists forecast an outright contraction and two anticipated the economic system to flatline.
On an annual foundation, gross home product (GDP) probably expanded 2.8%, in response to the median forecast from 22 economists polled Oct. 20-24, down from 2.9% within the second quarter.
The info will probably be revealed on Oct. 27.
“GDP progress is prone to have been slower in 3Q22 in contrast with 2Q22, primarily as a result of slowdown in consumption. The weak point in exports and manufacturing manufacturing is prone to have continued amid the deterioration within the international financial outlook,” famous Oh Suktae, economist at Societe Generale.
“GDP progress ought to stay sluggish, at the very least within the close to time period, with consumption progress normalising from the post-pandemic restoration and the export and funding environments prone to stay weak.”
Exports in Asia’s fourth-largest economic system grew on the slowest pace in almost two years in September and had been anticipated to weaken additional with rising fears of world recession and an financial slowdown in China, the nation’s largest commerce associate.
That, together with the Financial institution of Korea’s (BOK) aggressive rate of interest hikes to curb decade-high inflationary pressures, will weigh on the economic system. In October, the BOK raised its benchmark rate of interest by 50 foundation factors to three.00%.
The central financial institution has hiked charges by a cumulative 250 foundation factors already on this cycle.
“Wanting forward, weakening export prospects, elevated home inflation, rising debt servicing burdens and tightening coverage all level to intensifying progress headwinds,” mentioned Bansi Madhavani, senior economist at ANZ.
Based on a separate Reuters poll, progress is forecast to common 2.6% this yr and ease to 1.9% subsequent yr.
Reporting by Devayani Sathyan Polling by Veronica Khongwir
Modifying by Mark Potter
Our Requirements: The Thomson Reuters Trust Principles.
