Korea: GDP growth slows in Q3
December 2, 2016
The Korean economy lost some momentum in the third quarter of 2016, growing at the slowest pace in over a year. GDP grew 2.6% year-on-year (yoy), compared to 3.3% in the previous quarter.
The lower growth rate was mainly due to a fall in private consumption growth from 3.3% in Q2 to 2.7% in Q3. Total investment growth also dropped to 5.4% from 6.3% in the previous quarter, with a reduction in both transport equipment and machinery investment, while the growth rate of investment in construction increased from 10.8% to 11.4%. Government spending growth accelerated from 3.6% to 4.0%, mainly as a result of greater health insurance benefits.
On the external side of the economy, exports and imports increased 2.7% and 4.9% respectively in Q3, with the external sector deducting 1.0 percentage points from GDP growth in the period, slightly below the 0.6 percentage points subtraction recorded in the second quarter. The increase in exports was fueled by greater foreign sales of chemical products and semiconductors, while the rise in imports was due to greater imports of crude oil and overseas consumption by residents.
Author: Oliver Reynolds, Economist