Korea: Second release confirms stable growth in Q3
The Bank of Korea’s second GDP release confirmed the economy grew 2.0% in annual terms in the third quarter, matching the second quarter’s reading. In quarter-on-quarter terms adjusted for seasonality, the economy grew 0.4% in Q3, decelerating from the 1.0% expansion in Q2.
Fixed investment contracted again in Q3 but at a softer pace (Q3: -2.1% year-on-year; Q2: -3.4% yoy), while annual private consumption growth weakened marginally from 2.0% in Q2 to a revised 1.8% in Q3 (previously reported: +1.7% yoy). Moreover, government consumption growth eased marginally in Q3 to a revised 6.9% year-on-year (previously reported: +6.8%; Q2: +7.0 yoy).
Meanwhile, export growth accelerated to a revised 1.8% in Q3 (previously reported: +1.3% yoy; Q2: +1.2% yoy) and imports expanded a revised 2.3% in Q3 (previously reported: +2.0 yoy) after stalling in Q2. Overall, the external sector detracted a revised 0.1 percentage points from overall economic growth in Q3 (previously reported: -0.2 percentage points), contrasting Q2’s 0.5 percentage-point contribution.
Next year, economic activity is expected to accelerate. Particularly, accommodative fiscal and monetary stances, coupled with a tight labor market and strong wage growth, should protect the economy against external headwinds. That said, the rift with Japan and the U.S.-China trade war both cloud the outlook.