The Korean economy grew 1% in the third quarter from a quarter earlier, expanding its growth momentum, boosted by strong semiconductor exports and increased capital investment. However, private consumption turned negative as spending on both goods and services declined.
According to the the Bank of Korea on Tuesday, real GDP grew by 1.0% quarter-on-quarter in the third quarter of this year. It increased by 3.4% compared to the same period last year.
The quarterly growth rate rebounded sharply from -0.1% in Q4 last year to 1.8% in Q1 this year, followed by 0.6% in Q2 and 1.0% in Q3.
Exports in the third quarter of this year increased by 2.3% quarter-on-quarter, centered on semiconductors, machinery, and electrical equipment. This was an expansion from the previous quarter's growth rate (1.3%). Imports also rose by 2.4%, centered on crude oil and semiconductor manufacturing machinery. The contribution of net exports to growth was 0.1 percentage points.
Private consumption decreased by 0.2% quarter-on-quarter as spending on goods, such as passenger cars and home appliances, and services, such as finance and food, both declined. This is the largest decrease in four years and six months since Q1 2022 (-1.0%).
The contribution of private consumption to growth was recorded at -0.1 percentage points. In contrast, government consumption increased by 1.9% as expenditures on goods and health insurance benefits both rose.
Investment improved overall. Capital investment increased by 4.1% quarter-on-quarter, driven by higher spending on machinery such as semiconductor manufacturing equipment. This significantly exceeded the previous quarter's growth rate (0.2%). Investment in intellectual property products, which includes research and development and software, increased by 2.3%.
Construction investment also rose by 0.7% quarter-on-quarter, thanks to an increase in civil engineering construction. It shifted from a decline (-0.1%) in the previous quarter to growth. Changes in inventories boosted the growth rate by 0.1 percentage points. The contribution of total domestic demand to growth was 0.9 percentage points, expanding from the previous quarter (0.3 percentage points).
By economic activity, manufacturing increased by 2.0% quarter-on-quarter, centered on computers, electronics, optical equipment, and machinery and equipment. This was a larger increase than the previous quarter (1.4%). The construction industry also grew by 2.0% as civil engineering construction increased, rebounding from a decline (-1.9%) in the previous quarter.
The service industry increased by 0.2% quarter-on-quarter, centered on business services, information and communications, and transportation. However, growth slowed significantly compared to the previous quarter (1.0%). Agriculture, forestry, and fisheries increased by 5.9%, centered on cultivation and fishing, while the electricity, gas, and water supply industry increased by 3.7%, centered on the electric power sector.
Real Gross Domestic Income (GDI) in the third quarter of this year increased by 3.4% quarter-on-quarter, significantly exceeding the real GDP growth rate (1.0%). It rose by 18.8% compared to the same period last year, recording the highest growth rate in 48 years and nine months since Q4 1977 (19.0%).
in ECONOMY
