S. KOREA POSTS 0.7% GROWTH IN Q2

[Anchor Lead]

Korea's second-quarter GDP has grown 0.7 percent, beating expectations. This was mostly thanks to a rebound in consumption. Exports, however, fell compared to the previous quarter. In the second half of the year, both exports and domestic consumption are predicted to deteriorate.

[Pkg]

A department store in Seoul. Its apparel sales have boomed since April. Sales of sportswear in particular have surged about 30 percent.

[Soundbite] Han Jung-won(Salesclerk) : "One of the reasons is the lifting of COVID-19 restrictions. Many of our customers are in their 20s, and they can't travel overseas these days."

The Korean economy expanded 0.7 percent in Q2, beating expectations, as consumption of semi-durable goods such as apparel and footwear rebounded. However, exports, which propped up the domestic economy in the previous quarter, declined due to lockdowns in China. While external factors suppressed Korea's economic growth by 1.1 percent, domestic consumption raised it by 1.8 percent. In the second half of 2022, domestic consumption is predicted to stall.

[Soundbite] Hwang Sang-pil(Bank of Korea) : "High inflation and the new COVID-19 outbreak are undermining consumption. They could have a negative impact."

Exports are also facing numerous obstacles. With the U.S. and Europe raising their interest rates, the global economy is expected to decline. The war in Ukraine and COVID-19 lockdowns in China still continue. The Ministry of Economy and Finance has expressed concerns over economic stagnation for two months in a row. Bank of Korea chief Rhee Chang-yong slashed the nation's economic outlook for 2022 to the mid-2 percent range.

[Soundbite] Jung Min(Hyundai Economic Research Inst.) : "High interest rates, high inflation and high currency rates are expected to continue through the first half of 2023. The possibility of economic recession cannot be ruled out."

Major international organizations have also cut Korea's 2022 economic growth forecast recently. Japan's Nomura Securities says the Korean economy will likely grow only 1.9 percent and will start contracting from the third quarter.