South Korea Quarterly GDP Growth Below Consensus

South Korea’s quarterly GDP growth declined to 0.4 percent in the three months to September 2019 from 1.0 percent in the previous quarter, below market expectations of 0.5 percent. Softer growth was mainly explained by a slower rise in services and declines in utilities and construction. On the expenditure side, household consumption and government spending grew less while fixed investment shrank.
Bank of Korea | Mario | mario@tradingeconomics.com 10/24/2019 10:26:24 AM
On the production side, services lost steam and advanced 0.4 percent from 0.8 percent in Q2. In addition, sharp contractions were recorded for utilities (-12.3 percent vs 10.7 percent in Q2), due to a decrease in electricity and construction (-4.0 percent vs 1.6 percent), owing to declines in building construction and civil engineering. Conversely, manufacturing output grew at a faster 2.1 percent after expanding 1.1 percent in the second quarter, boosted by goods such as computer, electronic and optical products. Primary activity rebounded 1.4 percent after declining 3.6 percent, as crop output grew.

On the expenditure side, final consumption expenditure rose a modest 0.4 percent compared to a 1.1 percent expansion in the previous quarter. Private spending edged up 0.1 percent after increasing 0.7 percent, as expenditures on durable goods rose while those on semi-durable goods and resident households abroad declined. Meantime, government consumption grew at a softer 1.2 percent after expanding 2.2 percent, driven by an increase in health care benefits. Gross fixed capital formation fell 2.3 percent after growing 1.6 percent, mainly dragged by a 5.2 percent decline in construction (vs 1.4 percent), as building construction and civil engineering decreased. Meanwhile, exports advanced faster (4.1 percent vs 2.0 percent), as shipments of motor vehicles  and semiconductors expanded. Meanwhile, imports rose softer (0.9 percent vs 2.9 percent), driven by purchases of transportation equipment.

On an annual basis, the economy advanced 2.0 percent year-on-year in the third quarter of 2019, matching growth for the previous period but coming modestly below expectations of 2.1 percent.

South Korea Quarterly GDP Growth Below Consensus