SEOUL, – South Korea’s economy grew at a higher-than-expected rate on the back of reviving exports and domestic demand, central bank data showed Thursday, raising expectations that Asia’s fourth-largest economy may achieve its growth estimate of 1.4 percent.
The country’s real gross domestic product — a key measure of economic growth — increased 0.6 percent on-quarter in the July-September period, according to preliminary data from the Bank of Korea (BOK).
The third-quarter expansion is a bit higher than the estimate of a 0.56 percent gain from a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency, and compares with the 0.6 percent on-quarter expansion in the second quarter and the 0.3 percent gain in the first quarter.
On a yearly basis, South Korea’s economy advanced 1.4 percent in the third quarter, also higher than the market consensus of 1.17 percent and follows 0.9 percent growth for both the first and second quarters.
Asia’s fourth-largest economy has been on a recovery pace since it contracted 0.3 percent in the fourth quarter last year.
For the full year, the central bank expects the economy to grow 1.4 percent, down from a 2.6 percent expansion in 2022 and a 4.3 percent growth in 2021.
The central bank said the economy may grow in line with its own growth estimate for the year, but escalating geopolitical risks following the Israel-Hamas conflicts and higher for longer tightening monetary policies in major economies may pose downside risks to South Korea’s economy.
The central bank said private spending may post a mild recovery in the face of rising oil prices.
The central bank said the third-quarter expansion came as exports and domestic demand increased.
The country’s exports climbed 3.5 percent in the July-September period, a turnaround from the previous quarter’s 0.9 percent decline.
Imports also gained 2.6 percent in the third quarter from the previous quarter, following a 3.7 percent dip the previous quarter.
The country’s exports fell for the 12th consecutive month in September but logged the smallest on-year decline so far this year, as global demand for semiconductors has been on the recovery track.
Exports have marked an on-year drop since October last year amid the global economic slowdown and aggressive monetary tightening by the United States and other major economies to bring inflation under control.
Private spending also rose 0.3 percent in the third quarter, compared with a 0.1 percent decline the previous quarter.
Government spending also increased 0.1 percent in the third quarter, and construction investment increased 2.2 percent during the July-September period, according to the data.
South Korea’s economy has been facing growing uncertainty amid 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 held its key interest rate steady at 3.5 percent for the sixth straight time this month as it weighs a slowdown in growth amid moderating inflation.
The rate freezes came after the BOK delivered seven consecutive rate hikes from April 2022 to January 2023.
Source: Yonhap News Agency