SEOUL, July 23 (Reuters) – South Korea’s economy grew faster than expectations in the second quarter, driven by a semiconductor ‌export boom that offset a decline in construction investment, advance estimates ‌from the Bank of Korea showed on Thursday.

Gross domestic product expanded 0.6% in the April-June period ​from a quarter earlier on a seasonally adjusted basis, faster than a median estimate of 0.4% from a Reuters poll.

The result marks a sharp deceleration from the blistering 1.8% growth of the first quarter, but suggests chip-led growth ‌can keep the economic engine ⁠running as policymakers embarked on a tightening cycle with a 25-basis-point hike in July.

“As long as we see quarterly (growth) ⁠rate that is higher than minus 0.1% in the second half, on an average, it would be possible to see annual growth of 3%” this year, a ​BOK ​official said in a news conference.

The central ​bank in May raised this ‌year’s growth outlook to 2.6%, which is due to be revised in August.

With the headline inflation figure at a 2-1/2-year high in South Korea, a majority of analysts see the central bank delivering at least one more rate hike before the end of the year to take the policy rate ‌to 3.00%.

The BOK is expected to raise ​its key rate to 3.25% in the ​first quarter of 2027 and ​keep it there until at least the end of next ‌year, according to median forecasts in ​a Reuters poll.

On a ​year-on-year basis, GDP expanded 3.7%, also beating a median estimate of 3.5%.

Growth was driven by a 1.4% gain in exports from a ​quarter earlier, led by ‌shipments of “semiconductors, machineries and equipment,” the central bank said.

Private consumption expanded ​0.4%, while construction investment declined 0.2% from the first quarter.

https://finance.yahoo.com/economy/articles/south-korea-economy-expands-0-232103137.html