Korea: Economic growth slows to lowest level in three years
October 26, 2012
In the third quarter, GDP expanded 1.6% over the same period last year, the slowest pace recorded since Q3 2009. The reading was below the revised 2.3% increase tallied in the previous quarter (previously reported: +2.4% year-on-year) and missed market expectations of a 1.9% growth rate. The quarterly reading reflected a moderation in the contribution from the external sector to overall economic growth as global headwinds weigh on exports. Total consumption increased 1.9% annually in Q3, up from the 1.7% rise recorded in the previous quarter, as private consumption strengthened compared to the previous quarter. Meanwhile, gross fixed investment dipped 2.0% in the third quarter, virtually unchanged from the 2.1% contraction seen in the second. Meanwhile, the external sector's net contribution to overall growth fell from plus 1.5 percentage points in Q2 to plus 1.0 percentage points in Q3, as exports decelerated while imports improved somewhat. Exports of goods and services increased 2.6% annually (Q2: +3.2% yoy), while imports rose 0.9% (Q2: +0.5% yoy). A quarter-on-quarter comparison corroborates the slowdown suggested by the annual data. The economy expanded 0.2% over the previous quarter in seasonally adjusted terms, below the 0.3% expansion recorded in the second quarter.