South Korea’s economy grew 0.4 percent in January-March over the previous quarter, the central bank estimated on Tuesday, slightly below expectations and with growth almost halving from the fourth quarter of 2015.
First quarter growth was the slowest seen since the second quarter of last year due to poor exports and stumbling capital investment.
Sequential growth lagged a median forecast from a Reuters survey of 0.5 percent, on a seasonally adjusted basis, and was below the 0.7 percent rise in the fourth quarter. The forecasts from 17 analysts had ranged from 0.3 percent to 1.8 percent.
“We may see more of a slowdown in the second half of the year but for now, the second quarter will improve on base effects. This will prompt the Bank of Korea to save its bullets for later,” said Stephen Lee, economist at Samsung Securities, referring to the central bank possibly cutting interest rates from the current 1.50 percent.
A majority of analysts currently see the BOK lowering rates soon to prop up economic growth, which Lee says may take place later than some expect as the central bank will want to observe the fallout from ongoing structural reform. Read more