As terms of trade improved, the income of our citizens increased in the third quarter after two quarters. The Korean economy grew by 0.1% compared to the previous quarter in the third quarter. This figure is the same as the preliminary figure announced last October.
According to the provisional third-quarter national income announced by the Bank of Korea on the 5th, the real Gross National Income (GNI) in the third quarter increased by 1.4% compared to the previous quarter. Real GNI rose by 2.4% in the first quarter, then decreased by 1.4% in the second quarter, and rose again after two quarters. Compared to the same period last year, it increased by 2.7%.
Real GNI represents the real purchasing power of income earned by our citizens both domestically and abroad. An increase in real GNI is interpreted as an increase in the economic capacity of the people.
The increase in real GNI was largely due to the improvement in terms of trade, which reduced the real trade loss from 16.6 trillion won in the previous quarter to 14.2 trillion won. Also, real net primary income from abroad increased from 4.4 trillion won in the previous quarter to 9.2 trillion won. As a result, the growth rate of real GNI exceeded the growth rate of real Gross Domestic Product (GDP) (0.1%). Net primary income from abroad is the amount earned by our citizens abroad minus the income earned by foreigners domestically.
The provisional real GDP growth rate in the third quarter grew by 0.1% compared to the previous quarter, the same as the preliminary figure announced last October. However, exports (up 0.2 percentage points), imports (up 0.1 percentage points), and intellectual property product investment (up 0.1 percentage points) were revised upward, while construction investment (down 0.8 percentage points) and facility investment (down 0.4 percentage points) were revised downward.
By sector, private and government consumption, facility investment, and imports increased, but construction investment and exports decreased.
Private consumption increased by 0.5% compared to the previous quarter as both goods (such as passenger cars) and service consumption (such as medical and transportation) rose, and government consumption increased by 0.6%, mainly due to social security in-kind benefits (health insurance benefits).
Facility investment increased by 6.5% as both machinery (such as semiconductor manufacturing equipment) and transportation equipment (such as aircraft) rose.
Imports increased by 1.6% due to an increase in machinery and equipment.
On the other hand, construction investment decreased by 3.6%, mainly in building construction, and exports decreased by 0.2%, mainly in automobiles and chemical products.
The GDP deflator, an index representing the overall domestic price level, rose by 3.5% compared to the same period last year.
The total savings rate in the third quarter (34.4%) fell by 0.8 percentage points compared to the previous quarter, and the gross domestic investment rate (29.9%) also decreased by 0.8 percentage points compared to the previous quarter.
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