BOK: “If growth reaches 1.4% in Q4, annual growth could be in the 4% range”

[Financial News]  Projections suggest that South Korea’s economy could grow by more than 3% this year, and possibly as much as 4%. With cumulative growth reaching 3.6% through the third quarter, even growth in the 0% range in the remaining fourth quarter would exceed the forecast in the mid-3% range. Analysts say that if strong semiconductor exports continue and equipment and construction investment and domestic consumption rise, sustaining growth in the 1% range—which would be higher—could bring annual growth in the 4% range within reach.
On the 27th, the Bank of Korea announced that real gross domestic product (GDP) grew 1.0% quarter on quarter and 3.4% year on year in the third quarter of this year. This was more than three times the Bank of Korea’s August forecast of 0.3% quarter-on-quarter growth for the third quarter, marking a surprise expansion that exceeded expectations.
Lee Dong-won, head of the BOK’s Economic Statistics Department 2, said at a briefing on the GDP figures that day, “With exports and investment continuing to perform well, our economy maintained stronger growth than initially expected in the third quarter, following the first half,” adding, “Cumulative growth through the third quarter reached 3.6% year on year.”
Lee went on to say, “If quarter-on-quarter growth in the fourth quarter is 0.0%, the annual growth rate would mathematically come to 3.6%. If growth is higher than that, at 1.4% or more, annual growth of 4% would also be possible.”
Lee added, “Exports and investment are expected to remain strong in the remaining fourth quarter as well,” and said, “However, the extent to which private consumption rebounds will be important as a factor determining growth.”
Our economy is continuing its remarkable growth, riding the semiconductor supercycle.
After contracting, our economy rebounded sharply, growing 1.8% quarter on quarter in the first quarter of this year. Growth then came in at 0.6% in the second quarter and again reached the 1% range this quarter.
Year-on-year growth was 3.8% in the first quarter and 3.7% in the second. Although it edged down this quarter, growth remained in the 3% range.
The economy is now all but certain to achieve real GDP growth in the mid-3% range for the year. The BOK is expected to substantially raise the annual growth forecast of 3.3% it issued in August in its revised forecast next month.
Exports and investment drove GDP growth in the third quarter.
Equipment and construction investment, including machinery for semiconductor manufacturing, rose 4.1% and 0.7%, respectively, quarter on quarter, while government consumption increased 1.9%; together, they drove overall growth.
However, the recovery in private consumption slowed from the previous quarter, and the benefits of economic growth have yet to spread evenly to ordinary households. Private consumption fell 0.2% quarter on quarter as spending declined on both goods, such as passenger cars and home appliances, and services, such as finance and food. It rose just 1.1% year on year, well below overall growth.



[email protected] Jung Sang-gyun Reporter