Korean economy grows 0.6% on-quarter in Q3: BOK

Published : Oct 25, 2018 - 09:22 Updated : Oct 25, 2018 - 10:23

The South Korean economy slowed down in the July-September period, central bank data showed Thursday, fueling concerns of an economic downturn.

In the three months, Asia's fourth-largest economy grew 0.6 percent on-quarter, the same as the 0.6 percent gain tallied in the second quarter and down from a 1 percent expansion in the first, according to the advance estimate by the Bank of Korea.

The central bank lowered the earlier preliminary growth rate for the second quarter from 0.7 percent.

(Reuters)

From a year earlier, the country grew 2 percent over the three-month period, marking the slowest on-year growth since the third quarter of 2009.

The sluggish third-quarter growth came a week after the BOK revised down its growth target for 2018 to 2.7 percent from 2.9 percent.

"Quarterly growth of 0.6 percent is still in line with South Korea's growth potential of the annual 2.8-2.9 percent range," Park Yang-su, director general of the BOK economic statistics department, said in a briefing. "We need growth of 0.82 percent or over in the fourth quarter to meet the 2.7 percent target."

For the first nine months of the year, the South Korean economy grew a cumulative 2.5 percent, he added.

Sluggish construction and facility investment was the major drag for the slowdown.

Construction investment retreated 6.4 percent in the third quarter, recording the sharpest on-quarter drop since the second quarter of 1998, when it fell 6.5 percent in the midst of the Asian financial crisis.

At the same time, production of the construction industry fell by a 20-year low of 5.3 percent in the three-month period.

The contraction in the building sector came as the Seoul government has been moving harshly to press the real estate market to get high-flying housing prices under control.

"For the past several years, the housing market has experienced a boom, with a higher level of construction investment," the BOK official said. "Although investment in construction investment is decreasing, the level itself is still very high."

Moreover, corporate investment declined 4.7 percent on-quarter, remaining in negative terrain for two straight quarters following a 6.6 percent decrease in the previous quarter.

On the other hand, figures for consumption and exports stayed positive.

Private consumption edged up 0.6 percent on-quarter, widening from a 0.3 percent rise in the previous quarter, while government spending advanced 1.6 percent.

Exports -- one of the major pillars of the South Korean economy -- rose 3.9 percent from three months earlier, but imports inched down 0.1 percent due to a drop in machinery and transportation equipment.

Gross domestic income climbed 0.2 percent in July through September, turning around from a 0.9 percent decline three months earlier, the BOK said.

"We've pulled off a fairly good growth rate of 0.6 percent in the second and third quarters," the BOK said. "Exports are still on a steady rise despite the lingering trade rows, and private consumption is good enough to back up growth." (Yonhap)