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Korea GDP Q3 2023

Korea: GDP growth steady in Q3

According to a preliminary estimate, GDP growth was stable at Q2’s 0.6% increase on a seasonally adjusted quarter-on-quarter basis in Q3, slightly exceeding market expectations. The positive contribution to GDP from all expenditure components increased, with the exception of imports.

On an annual basis, economic growth accelerated to 1.4% in Q3, from the previous period’s 0.9% expansion.

Private consumption growth bounced back, growing 0.3% seasonally adjusted quarter-on-quarter in Q3 from a 0.1% contraction in Q2, aided by spending on entertainment, accommodation and travel. Public consumption also rebounded (Q3: +0.1% s.a. qoq; Q2: -2.1%), as did fixed investment (Q3: +0.4% s.a. qoq; Q2: -0.1%) and exports of goods and services (Q3: +3.5% qoq s.a.; Q2: -0.9%). However, imports of goods and services surged 2.6% in Q3 (Q2: -3.7% s.a. qoq), keeping GDP growth steady overall.

Our panelists expect GDP to grow less in Q4 quarter on quarter. Recent rate hikes are likely to force households to curtail their spending, especially given that the average Korean household has some of the highest debt levels in the world. In addition, external demand is likely to remain anemic in the face of weak global GDP growth.

Analysts at ANZ said:

“We are lifting our 2023 growth forecast to 1.3% (from 1.0%) on the back of today’s stronger-than-anticipated outturn, but keeping our below-consensus 1.8% forecast for 2024.”

Meanwhile, analysts at the EIU commented:

“The growth figure for the third quarter […] reinforces our view that real GDP growth will reach 1.3% in 2023. We expect growth to moderate sequentially in October-December amid weakening household spending and external demand. Momentum will gather again in 2024, as an anticipated end to monetary tightening and greater global trade flows will boost South Korea’s economic activity.”

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