South Korea’s Q3 Economic Growth Exceeds Estimates Driven by Reviving Exports and Domestic Demand

SEOUL, - Data released on Thursday indicates that South Korea's economy grew at a rate higher than anticipated, buoyed by a revival in exports and domestic demand. This has led to renewed expectations that the country may reach its estimated annual growth rate of 1.4 percent.

According to a new release by the Yonhap News Agency, the country's real gross domestic product (GDP) rose by 0.6 percent in the third quarter of this year. This marginally surpasses the 0.56 percent quarterly growth estimated by a Yonhap Infomax survey and compares with a 0.6 percent growth in the second quarter and a 0.3 percent increase in the first quarter.

On an annual basis, the economy grew by 1.4 percent in Q3, outpacing the market consensus of 1.17 percent and following 0.9 percent growth in both the first and second quarters of the year.

The Bank of Korea indicated that the economy is projected to grow by 1.4 percent for the full year, which is a decrease from the 2.6 percent expansion seen in 2022 and the 4.3 percent growth in 2021. The central bank cited escalating geopolitical risks and tightening monetary policies in major economies as potential downside risks.

During the third quarter, exports climbed 3.5 percent, reversing a 0.9 percent decline in the previous quarter. Imports also rose, gaining 2.6 percent following a 3.7 percent dip in the previous quarter. Despite a 12th consecutive monthly fall in September, exports recorded the smallest year-on-year decline so far in 2021, bolstered by global demand for semiconductors.

Private spending saw a slight uptick of 0.3 percent in the third quarter, contrasting with a 0.1 percent decrease in the previous quarter. Government spending also rose by 0.1 percent, and construction investment increased by 2.2 percent during the July-September period.

The Bank of Korea maintained its key interest rate at 3.5 percent for the sixth consecutive month, after delivering seven rate hikes from April 2022 to January 2023.

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