SEOUL — South Korea’s economic growth slowed in the third quarter, as subdued private consumption and weak construction and facility investment offset robust exports.
Gross domestic product (GDP) grew a seasonally adjusted 0.3% in the third quarter, central bank data showed on Tuesday, the slowest in five and following a 0.8% rise in the preceding quarter. It also missed 0.6% growth tipped in a Reuters survey .
Private consumption, which generates nearly half of South Korean GDP, contracted 0.3% in the September quarter after a 3.6% rise in the second quarter, while construction and facility investments also swung to declines of 3.0% and 2.3%, respectively.
Exports grew 1.5%, recovering from the June quarter’s 2.0% contraction, on strong sales of semiconductors and petroleum products.
“The toughened social distancing measures and impacts from the heat wave and rising raw material prices that continued over the third quarter seem to have limited the recovery in domestic demand… but exports were seen propping up the economy,” Finance Minister Hong Nam-ki said .
From a year earlier, the economy expanded 4.0%, in part because of the low base last year, while both exports and imports picked up further on global economic recovery.
That was, however, a significant slowdown from the second quarter’s 6.0% growth, and missed market forecast growth of 4.2%.
Economists see the pace of growth slowing in the final quarter as global supply chain disruptions and inflation pressures pose downside risks to the outlook.
“The near-term outlook for exports and manufacturing sector is likely to be clouded by sustained concerns about the global supply bottleneck,” Societe Generale’s economist Oh Suk-tae said.
But the economy could regain steam as the government aims to scrap the COVID-19 curbs by early 2022, which could add a further boost to consumption.
“We also expect a mild pickup in the fourth quarter growth thanks to the easing of restrictions based on the progress in vaccinations” Oh added.
More than 70% of the 51.3 million population are fully vaccinated.
The BOK currently sees the economy growing 4% for the whole of 2021 after shrinking 0.9% last year. (Reporting by Joori Roh; Editing by Sam Holmes)