Back To Top

Korean economy grows 0.4% on-quarter in Q3: BOK

The South Korean economy continued to grow at a steady pace in the third quarter, partly helped by increased government spending and a slight rebound in exports from three months earlier, central bank data showed Thursday.

In the three months ended Sept. 30, the country's real gross domestic product gained 0.4 percent from the previous quarter, according to the advance data from the Bank of Korea.


The Q3 estimate marks a slowdown from a revised 1 percent on-quarter expansion in the April-June period.

However, from the same period last year, the local economy grew 2 percent in the third quarter, on par with the revised 2 percent on-year growth in the previous quarter, according to the BOK.

The steady growth apparently offers some relief as it follows an unexpected 0.4 percent on-year contraction in the first quarter.

But it may still come as a disappointment to many, including the BOK, which had projected a 2.2 percent on-year growth for Asia's fourth-largest economy in its latest growth outlook in July.

"Annual growth of more than 2 percent will be possible only if the economy grows more than 0.97 percent (on-quarter) in the fourth quarter," a BOK official said.

The local economy expanded 1 percent from three months earlier in the second quarter, but many believe such a high growth rate may have only been possible because of a base effect created by the 0.4 percent on-quarter contraction in the first quarter.

Even without the Q3 growth estimate, the central bank had been widely expected to further slash its growth outlook in its final estimate due next month.

BOK Gov. Lee Ju-yeol too has noted it may "not be easy to meet the 2.2 percent growth target."

It was again government spending that helped keep Asia's fourth-largest economy growing in the third quarter.

Government spending gained 1.2 percent on-quarter in the July-September period, while private consumption inched up only 0.1 percent.

On an on-year basis, government spending surged 6.8 percent, while private spending gained 1.7 percent.

Exports also contributed to growth despite a steady decline in shipments, gaining 4.1 percent from three months earlier or 1.3 percent from the same period last year.

South Korea's exports have dropped for 10 consecutive months since December amid the trade conflict between the world's two largest economies -- the United States and China -- that are also the largest importers of South Korean products.

Against such a backdrop, the country's facility investment shrank 2.7 percent on-year in the third quarter, following a 7 percent plunge the previous quarter.

Construction investment slipped 3 percent from the same period last year in the July-September period.

By sector, output by the agricultural industry, including the fisheries industry, gained 1.4 percent on-quarter on increased output, marking a sharp turnaround from a 3.6 percent contraction in the second quarter, according to the BOK.

The manufacturing industry's output grew 2.1 percent from the previous quarter, while that of the service industry added 0.4 percent on-quarter.

Output by the construction industry dipped 4 percent from three months earlier.

Meanwhile, the central bank said the country's real gross domestic income grew 0.1 percent from three months earlier in the third quarter.

"The GDI grew at a slower pace than GDP due to deterioration in the country's terms of trade," it said. (Yonhap)