* Q2 GDP +0.3 pct q/q vs +0.4 pct estimated earlier
* Protracted euro zone crisis hits foreign trade
* Data reinforces views for another rate cut next week
(Adds more details, analyst’s comment)
By Se Young Lee
SEOUL, Sept 6 (Reuters) – South Korea’s economy grew just
0.3 percent in the April-June period from the prior quarter,
revised data showed on Thursday, undercutting earlier estimates
and reinforcing views for an interest rate cut next week.
The seasonally adjusted reading was below a 0.4 percent rise
estimated by the Bank of Korea in late July and a steep decline
in the rate of increase from 0.9 percent grow recorded during
the January-March quarter.
Economic activity was less than previously estimated in
almost all categories and both exports and imports were also far
weaker than initially thought – clear evidence the euro zone
crisis was mainly to blame, Bank of Korea data showed.
Analysts said the data, along with a series of bearish
indicators for July and August, reinforces market expectations
for another 25 basis-point rate cut by the Bank of Korea at its
Sept. 13 policy meeting following a reduction in July.
“The possibility that the simultaneous weakness in exports
and domestic demand will continue in the third quarter is
leading to the expectations for a rate cut next week,” said
Hyundai Securities economist Lee Sang-jae.
From a year earlier, Asia’s fourth-largest economy expanded
by a revised 2.3 percent in the second quarter, also slightly
slower than a 2.4 percent gain estimated before and down sharply
from a 2.8 percent rise in the first quarter.
Private consumption, which accounts for just over half of
GDP, grew a seasonally adjusted 0.4 percent in the second
quarter from the previous three-month period, the revised data
showed, compared with a 0.5 percent gain estimated earlier.
South Korea’s economy, heavily reliant on exports because
domestic demand is also strongly influenced by overseas sales of
its products, has been hit hard as the protracted crisis in the
euro zone dragged down demand from around the world.
(Editing by Choonsik Yoo and Eric Meijer)
