Private Consumption Drops for 6th Straight Quarter


By Lee Hyo-sik
Staff Reporter


The Korean economy grew by 4.6 percent in the third quarter from a year ago, lower than in the two previous quarters, as the nation’s once-booming exports slowed and private consumption continued to remain sluggish.

The Bank of Korea on Friday reported that the gross domestic product (GDP), the total value of goods and services produced in a country minus overseas income, previously expanded by 5.5 percent in the second quarter and 5.3 percent in the first quarter.

The economy grew by 0.6 percent in the third quarter from the previous quarter.

Given the 5.1 percent GDP growth from January through September, many economists predicted it would be difficult for the economy to achieve the government’s target of 5 percent growth rate for this year since the economy is expected to lose steam further in the fourth quarter.

With households reducing expenditures on durable goods such as automobiles, clothing and computers, private consumption fell 0.8 percent from July to September from the corresponding period last year, the sixth consecutive quarterly drop on a year-to-year basis, according to the BOK.

Consumers were increasingly tightening their belts toward the end of the year as private consumption declined even further to 0.8 percent in the third quarter, compared to a 0.6 percent fall in the second quarter.

Exports of industrial goods rose by 17.8 percent in the third quarter over a year ago, down from 29.5 percent in the second quarter and 29.2 percent in the third quarter, indicating a visible slowdown in once red-hot exports.

Automobile and telecommunication equipment sectors powered the overall export growth in the third quarter, while light industries such as textiles, leather, and furniture saw their outbound shipment decline by 2.1 percent.

The disparity between export and domestic demand narrowed during the third quarter as the ratio of export contribution to GDP growth came to 81.9 percent, down from 85.1 percent in the previous quarter, while the contribution to domestic demand rose to 18.1 percent from 14.9 percent over the same period.

As the terms of trade worsened due to surging oil prices and a weakening U.S. dollar, gross domestic income (GDI) grew by 3.5 percent in the quarter from a year ago, lower than the GDP growth rate of 4.6 percent.

Corporate facility investments rose 6.7 percent over a year ago, recording a second straight quarterly increase, while construction investment grew only by 1.5 percent, down from 3.8 percent in the second quarter.

Manufacturing output surged 11.6 percent in the third quarter from a year ago with the services industry edging up 1.3 percent.

leehs@koreatimes.co.kr