Q3 Real Gross Domestic Product (GDP) Growth Rate at 0.1%
Domestic Demand Recovers but Exports Slow More Than Expected
Although domestic demand showed signs of recovery, the growth rate of exports slowed down more than expected, resulting in a 0.1% growth of the Korean economy in the third quarter.
On the 24th, the Bank of Korea announced that the real gross domestic product (GDP) growth rate for the third quarter of this year (preliminary figure) grew by 0.1% compared to the previous quarter.
The Korean economy experienced positive growth for five consecutive quarters from the first quarter of last year (0.4%) through the second quarter (0.6%), third quarter (0.8%), fourth quarter (0.5%), and the first quarter of this year (1.3%), before recording a negative growth of -0.2% in the second quarter.
Domestic demand showed a recovery trend centered on private consumption. Private consumption grew by 0.5% as consumption of goods (passenger cars, communication devices, etc.) and services (medical care, transportation, etc.) increased. Government consumption rose by 0.6%, mainly due to social security in-kind benefits (health insurance benefit payments).
Construction investment decreased by 2.8% as both building construction and civil engineering declined. Facility investment increased by 6.9% as machinery (such as semiconductor manufacturing equipment) and transportation equipment (such as aircraft) both rose.
On the other hand, exports showed a sluggish trend. Exports in the third quarter decreased by 0.4%, mainly due to automobiles and chemical products. Imports increased by 1.5% as machinery and equipment rose.
The third quarter growth rate was driven by domestic demand. The contribution of domestic demand to the third quarter economic growth rate was 0.9 percentage points, turning positive from -0.2 percentage points in the second quarter. The contribution of net exports (exports minus imports) was -0.8 percentage points, continuing the negative trend from -0.1 percentage points in the second quarter.
Looking at growth contributions by sector, the private sector contributed -0.4 percentage points, while the government contributed 0.5 percentage points, indicating that the third quarter growth was led by the government sector.
By industry, agriculture, forestry, and fisheries increased by 3.4%, centered on livestock farming. Manufacturing grew by 0.2%, driven by transportation equipment, machinery, and equipment. The electricity, gas, and water supply sector increased by 5.1% due to growth in electric power companies. The service sector grew by 0.2%, despite declines in wholesale, retail, and accommodation and food services, as medical and health services, social welfare services, and transportation increased. Conversely, the construction industry decreased by 0.7%, mainly due to building construction.
The real gross domestic income (GDI) in the third quarter increased by 0.5%, surpassing the real gross domestic product (GDP) growth rate of 0.1%.
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