Korea's gross domestic product (GDP) expanded year on year by 2.9 percent in the second quarter of 2018 as robust export growth helped offset a slower increase in consumer and government spending. This figure was mostly in line with expectations, but the quarter-on-quarter growth rate dropped to 0.7 percent for the April - June period from 1.0 percent for the previous three-month period due to a rapid fall in equipment investment.
The second quarter of 2018 saw a 0.8 percent rise in exports, which account for about 43 percent of GDP, backed by an increase in outbound shipments of semiconductors, coal and petroleum products. Year-on-year export growth remained strong at 5.2 percent, but slower quarterly growth raised concerns over the outlook for export performance in the second half of the year. Meanwhile, imports contracted by 2.6 percent compared with the previous quarter as inbound shipments of machinery and transportation equipment declined.
Domestically, both private and government spending growth slowed to a pace of 0.3 percent each quarter on quarter. Consumer spending growth seems to have lost momentum following the end of the Winter Olympics in PyeongChang, which helped boost consumption in the first quarter of the year.
Construction investment fell by 1.3 percent as spending on residential construction and civil works declined. Investment spending on plants and equipment dropped sharply by 6.6 percent, recording the lowest level since a 7.1 percent decline in the first quarter of 2016, due to diminishing investment in manufacturing machines for memory chips and display panels.
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