S. Korea’s Economic Growth Falls Short of Expectations in Third Quarter

Seoul: South Korea's economy experienced slower-than-anticipated growth in the third quarter, hindered by a downturn in exports despite increases in domestic demand and facility investment, according to data released by the central bank on Thursday. The country's real gross domestic product (GDP) grew by 0.1 percent quarter-on-quarter for the July to September period, as reported by preliminary data from the Bank of Korea (BOK). According to Yonhap News Agency, the third-quarter growth figure fell significantly below the market's expectation of a 0.5 percent increase. This follows a 0.2 percent contraction in the second quarter and a 1.3 percent growth in the first quarter of the year. On an annual basis, the economy expanded by 1.5 percent in the third quarter, a decrease from the 2.3 percent growth observed in the second quarter. Private consumption witnessed a 0.5 percent quarter-on-quarter increase, rebounding from a 0.2 percent decline in the previous quarter. However, the country's exports contracted by 0.4 percent, a stark contrast to the 1.2 percent gain in the previous quarter. Imports rose by 1.5 percent in the third quarter, slightly down from a 1.6 percent increase in the previous quarter. Government spending grew by 0.6 percent, while construction investment declined by 2.8 percent, a further contraction from the prior quarter's 1.7 percent fall. South Korea's economic growth in 2023 marks its slowest pace in three years, largely due to a slump in exports amid global monetary tightening. The economy grew by 1.4 percent last year, down from a 2.6 percent expansion in 2022 and 4.3 percent growth in 2021. The 2023 growth rate is the lowest since a 0.7 percent contraction in 2020 during the pandemic. Despite the current slowdown, the Bank of Korea projects a slight rebound for the entire year, anticipating a 2.4 percent growth. Earlier this month, the central bank reduced its key interest rate by a quarter percentage point to 3.25 percent, concluding a period of restrictive monetary policy as inflati on moderates and domestic demand weakens. This decision follows a series of seven consecutive interest rate hikes from April 2022 to January 2023, aimed at controlling surging inflation in Asia's fourth-largest economy.