Income down for two straight quarters

Korea’s GDP grows 0.6 percent in Q3

Korea’s economy grew 0.6 percent in the third quarter from a quarter earlier, according to Bank of Korea (BOK) preliminary data Friday.

This is a 0.1 percentage point drop from the central bank’s initial estimate in October as investment in construction and exports slowed more than expected.

With lower gross domestic product (GDP) growth than the earlier estimate and gross national income (GNI) falling for two straight months, analysts and industry sources say Korea’s economic outlook remains murky.

Korea is expected to grow in the low zero percent range in the fourth quarter as the country’s sociopolitical uncertainty is weighing down sentiment and consumption, they say.

“Korea is expected to remain in the low growth path amid political uncertainty and low sentiment,” said Eugene Investment & Securities economist Lee Sang-jae, noting that toughened regulations against housing speculation and debt would affect private consumption.

As data showed manufacturing falling 0.9 percent from the last quarter, the lowest decrease since the first quarter of 2009 when it fell 2.5 percent, the central bank also raised concerns the economy would barely grow 2.7 percent this year as forecast unless fourth-quarter GDP growth reaches 0.4 percent.

“Should the country grow in the (low) range of 0.1 to 0.4 percent in the fourth quarter, it might be able to achieve 2.7 percent,” a BOK official said.

Korea grew 2.6 percent in the third quarter, from a year earlier, the lowest since the third quarter of last year, when it grew 2.8 percent.

Construction investment grew 3.5 percent this quarter, lower than the initial estimate of around 4 percent.

Private consumption expanded 0.5 percent, lower than government spending, which grew 1.4 percent due to an increase in health insurance benefits.

Exports increased 0.6 percent in the third quarter, down from a 1.1 percent increase in the second quarter.

Suspended production of Samsung Electronics’ Galaxy Note 7 smartphones and a prolonged management-labor dispute at Hyundai Motor had a negative effect on overall exports.

The central bank last October cut its growth projection for 2017 to 2.8 percent from 2.9 percent after partially reflecting those negative factors.