Korea’s third-quarter growth slowed to a level seen at the height of the global financial crisis in 2009, dimming the chances of Asia’s fourth-largest economy achieving its annual growth outlook of 2.4 percent.
According to the Bank of Korea on Thursday, the nation’s July-September real GDP grew only 0.1 percent from the previous quarter, half the estimate announced in October.
Korea had grown 0.1 percent on-quarter in the first three months of 2009, when it was hit most by the global financial crisis.
The on-quarter real GDP growth, which measures economic output adjusted for inflation, has continued to slow from 0.9 percent in the first three months of this year to 0.3 percent in the second quarter and finally to just above zero.
The BOK said Korea would not be able to reach the central bank’s growth projection for this year (2.4 percent) which was renewed in October. It also said indicators of the real economy are unlikely to show a distinct recovery in the last three months of this year as well.
“In order to reach this year’s growth estimate of 2.4 percent, real GDP in the fourth quarter should grow about 1.6 percent on-quarter, which would be difficult considering current circumstances,” a BOK official said, adding that a reduction in facility investment is likely to be the biggest restraint to further growth.
Korea’s on-quarter facility investment growth was negative for two consecutive quarters (-7 percent in Q2 and -4.8 percent in Q3), BOK data showed.
He rejected the possibility of seeing negative fourth-quarter GDP growth, however, citing an increase in exports in November.
Exports, which had dipped 0.6 percent in the second quarter, gained 2.8 percent on-quarter in the third thanks to sales of petroleum products and wireless telecommunication devices.
Backed by improved trade conditions, real gross national income in the third quarter rose 0.5 percent from the previous three months ago.
Q3 gross savings ratio (gross savings divided by gross national disposable income) shed 1.1 percent and gross investment ratio (gross capital formation divided by gross national disposable income) plunged 26 percent on-quarter.
Third-quarter real GDP did grow 1.5 percent from a year ago, but it fell short of the estimate in October (1.6 percent). The on-year growth in July-September was also the lowest since the third quarter of 2009 (1.0 percent).
By Kim So-hyun (email@example.com