Korea: Economy slows in 2012 amid lower exports
January 24, 2013
In the fourth quarter, GDP expanded 1.5% over the same period the previous year. The reading matched the increase tallied in the previous quarter but missed market expectations of a 1.8% growth rate. For the full year 2012, GDP expanded 2.0%, which is down from the 3.6% increase in 2011, as global headwinds weighed on exports.
Total consumption increased 2.9% annually in Q4, up from the 2.0% rise recorded in the previous quarter, as private consumption strengthened compared to the previous quarter. On the other hand, gross fixed investment dipped 4.1% in the fourth quarter, a deterioration from the 2.3% contraction seen in the third.
Meanwhile, the external sector's net contribution to overall growth fell from 1.0 percentage points in Q3 to 0.8 percentage points in Q4, as growth in imports outpaced that of exports. Exports of goods and services increased 4.0% annually (Q3: +2.9% yoy), while imports rose 3.1% (Q3: +1.1% yoy).
A quarter-on-quarter comparison, however, points to an improvement in economic activity. The economy expanded 0.4% over the previous quarter in seasonally adjusted terms, faster than the 0.1% expansion recorded in the third quarter.
The Bank of Korea expects the economy to strengthen in the first quarter and to expand 2.8% in the full year, down from its previous 3.2% growth estimate. For 2014, the Bank expects the economy to grow 3.8%.