According to a statement by the Bank of Korea, the second quarter economic growth in South Korea slowed in comparison to the first-quarter growth, largely due to decreased stimulus expenditure by the government; thereby substantiating the viewpoint that any monetary tightening for the rest of the year will be limited and gradual.

The central bank said in Seoul on Monday that the gross domestic product increased 1.5 percent in the second quarter, which, though exceeding the 1.3 percent average estimates by seven economists surveyed by Bloomberg News; was less than the 2.1 percent gain reported in the first quarter.

The year-on-year GDP during the second quarter increased 7.2 percent from the last year same quarter figures, chiefly because of a lower comparative base in the year-before period. The GDP rise in the first quarter stood at 8.1 percent.

In its statement, the central bank elaborated: “Manufacturing grew further in the second quarter from the previous quarter, but the construction sector turned to decline due to a big drop in new residential houses amid the sluggish real estate market.”

In July, the Bank of Korea followed its counterparts in Thailand, Taiwan and Malaysia in terms of raising rates. India too is likely to follow suite, boosting borrowing costs in the near future; at a time when Asia is leading the worldwide recovery as well as grappling with price pressures.