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SEOUL, Oct. 26 (Yonhap) — South Korea’s gross domestic product (GDP) registered a higher-than-anticipated increase in the third quarter due to resurgent exports and domestic demand, according to data from the Bank of Korea (BOK), leading to expectations that the country’s economy may reach its 1.4 percent growth target for the year.
Real GDP rose 0.6 percent in the July-September period, as opposed to the 0.56 percent gain forecasted by Yonhap Infomax, the financial data firm of Yonhap News Agency. This is an improvement from the 0.6 percent and 0.3 percent quarterly increases in the second and first quarters, respectively.
Year-on-year, South Korea’s economy expanded 1.4 percent in the third quarter, surpassing the market consensus of 1.17 percent, and follows 0.9 percent growth for both the first and second quarters.
The nation’s economic activity has been on a recovery trajectory since it contracted 0.3 percent in the fourth quarter of last year.
The BOK anticipates the economy to grow 1.4 percent for the full year, lower than the 2.6 percent growth in 2022 and the 4.3 percent expansion in 2021.
The central bank stated that the economy may reach its growth forecast, however, rising geopolitical tensions resulting from the Israel-Hamas conflict and continuing tightening monetary policies in major economies may present downside risks to South Korea’s economy.
The central bank said private spending may post a mild recovery due to higher oil prices.
The third-quarter growth was driven by an upsurge in exports and domestic demand.
The country’s exports rose 3.5 percent in the July-September period, which is a turnaround from the 0.9 percent decline in the previous quarter. Imports also increased 2.6 percent in the third quarter after a 3.7 percent drop in the second quarter.
Exports have been on a downward trend since October last year due to the global economic slowdown and aggressive monetary tightening by the United States and other major economies to bring inflation under control. Nevertheless, September marked the smallest on-year decline so far this year, as worldwide demand for semiconductors is on the rise.
Private spending also grew 0.3 percent in the third quarter, compared with a 0.1 percent decrease the previous quarter. Government spending and construction investment also increased 0.1 percent and 2.2 percent, respectively, during the July-September period.
South Korea’s economy is facing increasing uncertainty due to worries over aggressive monetary tightening in major countries, including the United States, escalating geopolitical tensions, rising household debt, and a slowdown in China’s economy, the country’s top trading partner.
The central bank maintained its key interest rate at 3.5 percent for the sixth consecutive time this month as it weighs a slowdown in growth against moderating inflation.
The rate freeze came after the BOK delivered seven consecutive rate hikes from April 2022 to January 2023.
Containers are stacked at a pier in South Korea's largest port city of Busan, in this file photo taken July 4, 2023. (Yonhap)
sam@yna.co.kr
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