Daily Management Review

South Korean GDP growth in Q3 slows more than expected


South Korean economic growth in the III quarter slowed more than expected, according to preliminary data from the Bank of Korea.

Laurie Nevay
Laurie Nevay
South Korea's GDP increased by 0.4% compared with the previous quarter after rising by 1% in the II quarter.

Analysts surveyed by Bloomberg predicted growth of 0.5%.

In annual terms, the economy of South Korea in July-September grew by 2%, just like in April-June. The result coincided with the forecast of analysts.

Private consumption, which accounts for almost half of South Korea’s GDP, increased by 0.1% in July-September compared with the previous quarter. In April-June, an increase of 0.7% was recorded.

Exports grew by 4.1% in real terms relative to the second quarter. The Bank of Korea noted an increase in the supply of semiconductors and automobiles compared with the previous quarter. Nevertheless, trade uncertainty continues to put pressure on investment.

Asia's fourth-largest economy is affected by the US-China trade war and its related technological war, as well as a slowdown in demand for semiconductors. Additional pressure on the economy of South Korea has a trade dispute with neighboring Japan.

According to the central bank, the increase in duties resulting from the trade war and the resulting uncertainty have damaged exports, investments and consumption in South Korea, cutting economic growth by 0.4 percentage points this year.

Last week the Bank of Korea lowered the seven-day repo rate by 25 basis points to 1.25%, which corresponds to the record low level at which the rate was set at the end of 2017.

The regulator also signaled the possibility of further easing of monetary policy.

The International Monetary Fund last week lowered forecasts for economic growth in South Korea for 2019 and 2020 by 0.6 percentage points to 2% and 2.2%, respectively.

source: bloomberg.com