The Bank of Korea said it sees it as possible to achieve an annual growth rate of 1.1% this year. With third-quarter growth running hotter than expected at 1.3%, the annual growth rate could reach 1.1% even if fourth-quarter growth is 0%.
On the 3rd, the Bank of Korea said the real gross domestic product (GDP) growth rate for the third quarter (quarter on quarter, preliminary) was tallied at 1.3%. That is 0.1 percentage point (p) higher than the advance estimate (1.2%) released in Oct. It is also the highest since the fourth quarter of 2021 (1.6%).
The Bank of Korea (BOK) said the annual growth rate could top 1% this year. Kim Hwa-yong, Director General of the BOK National Accounts Division 2 in the Economic Statistics Department, said, "Arithmetically, even if fourth-quarter GDP is in the range of -0.4% to -0.1% quarter on quarter, achieving 1.0% annual growth is possible," adding, "If fourth-quarter growth is 0% or higher, 1.1% annual growth is also possible."
Meanwhile, the Bank of Korea (BOK) cited a rebound in domestic demand as the driver of third-quarter GDP growth. According to the BOK, of the 1.3% third-quarter growth, domestic demand contributed 1.3 percentage points (p) and net exports contributed 0.1%p. Compared with the previous quarter, the contribution from domestic demand increased by 0.8%p, while the contribution from net exports decreased by 0.2%p.
Consumption, one pillar of domestic demand, increased evenly in the private sector (1.3%) and the government (1.3%). Private consumption rose mainly in goods and services, while government consumption increased mainly in material expenses and health insurance benefit payments. Investment also improved. Construction investment (0.6%) increased mainly in civil engineering, and facility investment (2.6%) rose as machinery investment increased. Each posted the highest growth rate since the first quarter of last year (4.5%) and the third quarter of last year (5.4%), respectively.
The investment institutional sector also improved. Construction investment increased 0.6% centered on civil engineering, marking the first increase since the first quarter of last year (4.5%). Facility investment grew 2.6% as investment in machinery, including semiconductor manufacturing equipment, increased, logging the highest growth rate since the third quarter of last year (5.4%).
Director General Kim said, "Despite construction suspensions caused by safety accidents at some builders, construction investment far exceeded expectations as nonresidential building construction increased, centered on semiconductor production plants," adding, "Facility investment also increased as corporate auto investment was solid and general industrial machinery investment expanded."