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(2nd LD) S. Korean economy grows 0.6 pct on-quarter in Q3: BOK

All News 10:11 December 04, 2018

(ATTN: ADDS comments in paras 5-7)

SEOUL, Dec. 4 (Yonhap) -- The South Korean economy expanded 0.6 percent in the third quarter from three months earlier, central bank data showed Tuesday, amid rising concerns over an economic downturn.

The July-September growth rate was the slowest since the fourth quarter of last year when the economy contracted 0.2 percent, according to the preliminary data by the Bank of Korea (BOK).

Following a 0.6 percent rise in the second quarter, Asia's fourth-largest economy has been below the 1 percent expansion line for two quarters in a row.

On a year-on-year basis, South Korea grew 2 percent over the three-month period, making it the slowest on-year growth since the third quarter of 2009.

To meet the target growth of 2.7 percent for 2018, the central bank said the economy has to post an expansion of at least 0.84 percent in the last three months of the year.

"There are some downside risks such as uncertain trade issues, but we also have positive factors," the BOK said. "The government's stimulus package including a fuel tax cut will lend support to the economy's recovery."

It said a growing number of foreign visitors will also help boost private consumption in the fourth quarter as 1.52 million arrivals were recorded in October alone, up 30.4 percent from a year earlier.

(2nd LD) S. Korean economy grows 0.6 pct on-quarter in Q3: BOK - 1

Weak domestic demand led the sluggish economic growth in the July-September period.

Construction investment tumbled 6.7 percent in the third quarter -- the sharpest on-quarter drop since the first quarter of 1998, when it slid 9.7 percent in the midst of the Asian financial crisis.

At the same time, production of the construction industry fell by a more-than-20-year low of 5.7 percent in the three-month period.

Both figures worsened from the advance estimate released in October. The earlier data showed a 6.4 percent decline in construction investment and a 5.3 percent growth in production.

The sharp contraction in the building sector came as the South Korean government has been pressing the real estate market to get high-flying housing prices under control.

Moreover, corporate investment declined 4.4 percent on-quarter, remaining in negative terrain for two straight quarters following a 5.7 percent decrease in the previous quarter.

Positive consumption and exports, on the other hand, partly offset the sluggish performances in construction and facility investment.

Private consumption edged up 0.5 percent on-quarter, widening from a 0.3 percent rise in the previous quarter, while government spending advanced 1.5 percent.

Exports -- the key economic driver of South Korea -- rose 3.9 percent from three months earlier, but imports inched down 0.7 percent due to a drop in machinery and transportation equipment.

Gross domestic income climbed 0.7 percent in July through September, turning around from a 1 percent decline three months earlier, the BOK said.


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