SEOUL, July 25 (Xinhua) -- South Korea's economic growth rebounded in the second quarter after posting a negative expansion in the previous quarter as fiscal spending by the central government boosted infrastructure construction by municipal governments, central bank data showed Thursday.
Real gross domestic product (GDP), adjusted for inflation, expanded 1.1 percent in the April-June quarter from the previous three-month period, according to the Bank of Korea (BOK).
It was a turnaround from a 0.4 percent contraction tallied in the January-March quarter, marking the fastest growth in seven quarters since the third quarter of 2017. From a year earlier, the real GDP advanced 2.1 percent.
The fiscal expenditure raised the GDP growth by 1.3 percentage points, while the private sector pulled it down by 0.2 percentage points.
The central government offered financial grants to the municipal governments in the first quarter, but much of the grants-in-aid was spent in the second quarter, contributing to the GDP rebound.
Market watchers said the South Korean economy was not into a full-grown recovery track, given the big contribution of fiscal expenditure and the continued fall in export, which accounts for about half of the export-driven economy.
The outbound shipment kept sliding for the seventh consecutive month through June on the downturn in business cycle of the global semiconductor industry and the global trade dispute.
Adding to the concerns, Japan tightened regulations early this month on its export to South Korea of three materials crucial for the production of memory chips and display panels, which are the mainstay of the South Korean export.
Japan was reportedly forecast to remove South Korea from its whitelist of preferential procedures for export in the near future, a move estimated to negatively influence more than 1,000 items in trade between the two countries.
The BOK lowered its benchmark interest rate by 25 basis points to 1.50 percent earlier this month to deal with the possible negative effect from the trade row between Seoul and Tokyo.
The central bank also slashed its 2019 growth outlook for the economy to 2.2 percent from 2.5 percent estimated three months earlier, calling on the government to bolster the lackluster economy with an expansionary fiscal policy.
Among the GDP factors, private consumption rose 0.7 percent in the second quarter from three months earlier due to demand for semi-durable goods such as clothing and medical services.
The government spending expanded 2.5 percent in the quarter on an increased payment of public insurance benefits and item purchases.
Construction investment grew 1.4 percent on the expanded public works that offset a reduction in the development of residential areas, caused by the government's efforts to control speculative investment in the real estate market.
Facility investment gained 2.4 percent on a quarterly basis on demand for transport equipment.
