S. Korea’s Q3 GDP expands 0.3% in preliminary data, real GNI down 0.7%

2022.12.01 11:28:01 | 2023.04.03 14:14:02

[Photo by MK DB]이미지 확대

[Photo by MK DB]

South Korea’s economy added 0.3 percent in the third quarter from the previous quarter led by more increased private spending and facility investment in chip sector, but the continued trade deficit from weaker exports poses a gloomy outlook for the economy.

According to preliminary data announced by Bank of Korea on Thursday, the country’s real gross domestic product (GDP) gained 0.3 percent in the third quarter ended September from the previous quarter, remaining unchanged from its advanced estimate on Oct. 27.

Korea’s economy managed to expand for the nineth straight quarter from the third quarter of 2020 when the economy added 2.3 percent. It grew 1.2 percent in the following quarter, 1.7 percent in the first quarter of 2021, 0.8 percent in the second quarter, 0.2 percent in the third quarter, 1.3 percent in the fourth quarter, 0.6 percent in the first quarter of this year, and 0.7 percent in the second quarter.

The main Kospi on Thursday morning was up 0.74 percent to 2,490.8, and the Kosdaq was up 1.78 percent to 742.54.

[Photo by Yonhap]이미지 확대

[Photo by Yonhap]

The U.S. dollar was trading at 1,298 won, down 21 won from Wednesday’s closing.

The growth in the economy was mainly driven by private consumption that gained 1.7 percent in the third quarter on strong demand for semi-durable goods like entertainment and leisure items and restaurant, accommodation, and other services.

Facility investment also went up 7.9 percent against the previous quarter as spending in machinery such as chip equipment and transportation equipment expanded. Government spending also edged up 0.1 percent on quarter on increased spending on materials.

Construction investment, however, fell 0.2 percent on quarter on sluggish engineering construction sector.

Compared with the advanced estimate announced earlier, growth in private spending, construction investment, government spending edged down 0.2 percentage point, 0.6 percentage point, and 0.1 percentage point, respectively, while that in facility investment, exports, and imports, went up 2.9 percentage points, 0.1 percentage point, and 0.1 percentage point.

Private consumption and facility investment contributed 0.8 percentage point and 0.7 percentage point to third quarter GDP growth.

Image of Busan Port이미지 확대

Image of Busan Port

Exports gained 1.1 percent in the third quarter from the previous quarter thanks to robust shipments of transportation equipment and services despite a decline in chip demand to escape 3.1 percent contraction in the second quarter.

Imports, however, increased 6.0 percent, gaining faster than exports on a jump in crude oil and natural gas imports.

As a result, net exports dragged down the net exportl growth by 1.8 percentage points, suggesting that recent trade deficit trend is weighing down on the country’s economy.

Agriculture, forestry, and fisheries output grew 3.9 percent on quarter in the third quarter, construction 1.3 percent, and services 0.8 percent. Accommodation and restaurant output rose 4.3 percent and culture and other output 5.9 percent.

Manufacturing output, however, retreated 0.8 percent on quarter in the third quarter, due to a 6.3 percent fall in computer, electronics, and optical instrument and a 3.7 percent fall in chemical products.

GDP and GNI growth rates [Source : BOK]이미지 확대

GDP and GNI growth rates [Source : BOK]

Nominal gross national income (GNI) in the third quarter fell 0.1 percent from the second quarter. Real GNI fell 0.7 percent, lower than real GDP growth of 0.3 percent on worsened trade environment.

GDP deflator, a measure of the price level of all domestically produced goods and services in an economy, rose by 0.2 percent on year in the third quarter.

Gross saving ratio fell 1.5 percentage points from the second quarter to 32.7 percent in the third quarter as the final consumption expenditure growth of 2.2 percent was higher than the nominal gross disposable income of zero percent.

By Lee Eun-joo

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