[Economic Outlook] Attention on Q3 GDP Recovery Level... September Industrial Trends Announcement

[Asia Economy Reporter Kim Bo-kyung] Next week, the third-quarter Gross Domestic Product (GDP) growth rate, which can provide an estimate of the pace of economic recovery after the shock of the novel coronavirus infection (COVID-19), will be released. The government will also announce industrial indicators that can help assess the impact of the recent COVID-19 resurgence on the real economy.

The Bank of Korea is scheduled to announce the third-quarter real GDP growth rate (quarter-on-quarter, preliminary) on the 27th.

Previously, the second-quarter GDP growth rate (provisional) was -3.2%, marking two consecutive quarters of decline following the first quarter's (-1.3%) contraction. The quarterly growth rate of -3.2% is the lowest level in 11 years and 6 months since the fourth quarter of 2008 (-3.3%) during the financial crisis.

In August, the Bank of Korea forecasted that this year's GDP would contract by 1.3% compared to last year. To maintain even this level of growth, the economy must achieve mid-1% growth (quarter-on-quarter) in both the third and fourth quarters. Attention is focused on whether the preliminary third-quarter growth rate will indeed reach the expected mid-to-high 1% range.

Following this, the Bank of Korea will consecutively release the October Consumer Sentiment Index and Business Survey Index (BSI) results on the 28th and 29th. There is interest in how much the household and corporate sentiment, which had been depressed due to the COVID-19 resurgence since mid-August, has recovered.

The Statistics Korea will announce the September Industrial Activity Trends on the 30th. This indicator provides a comprehensive view of the state of the real economy, including production, consumption, and investment. The September industrial activity trends will offer insights into the impact of the COVID-19 resurgence on the real economy since August.

The real economy in September is analyzed to have been sluggish. Given that social distancing level 2.5 was implemented in the Seoul metropolitan area until mid-September, it is widely believed that the economic contraction was significant.

After mid-September, the COVID-19 increase trend eased considerably, and social distancing was relaxed to level 2, reducing the impact of the resurgence relatively.

There are also expectations that measures for the Jeonse market will be announced next week. Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki stated at the National Assembly audit on the 23rd, "We will prepare measures to stabilize the Jeonse market to the maximum extent possible without conflicting with current policies."

Deputy Prime Minister Hong explained, "We have reviewed all Jeonse measures from the past 10 years, but there are few sharp short-term measures," adding, "We are actively exploring policies that can help stabilize the Jeonse market."