Korea: Economic growth maintains pace in third quarter
October 28, 2011
In the third quarter, GDP expanded 3.4% over the same period the previous year. The result mirrored the result of the previous quarter and slightly undershot market analysts' expectations, which had the economy expanding 3.5%. The third quarter reading implied a moderation in the contribution to growth from domestic demand, while the external sector improved compared to the same period of the previous year. Total consumption increased 2.5% annually, down from the 2.8% rise recorded in the previous quarter. Private consumption (Q2: +3.0% year-on-year; Q3: +2.2% yoy) moderated compared to the previous quarter, while government consumption accelerated (Q2: +2.1% yoy; Q3: +3.4% yoy). Finally, fixed investment contracted 1.6% (Q2: -1.1% yoy). Meanwhile, the external sector's net contribution to overall growth rose from 1.4 percentage points to plus 2.2 percentage points, as exports outpaced imports. Exports of goods and services increased 9.4% annually (Q2: +9.6% yoy) while imports rose a softer 6.4% (Q2: +7.9% yoy). A quarter-on-quarter comparison corroborates the moderation suggested by the annual data, as the economy expanded 0.73% over the previous quarter in seasonally adjusted terms, down from the 0.89% increase observed in the second quarter. Recently, Bank of Korea Governor Kim Choong-soo warned that GDP growth might miss the Bok's official 4.3% forecast for this year. Next year, the official BoK forecast has the economy growing at a 4.6%.
Author: Armando Ciccarelli, Head of Data Solutions