South Korea sees slower growth in the third quarter

Seoul: South Korea’s economic growth slowed in the third quarter, its central bank said on Thursday, warning that it could post its weakest annual expansion for a decade in the face of multiple trade spats. Gross domestic product rose 0.4 per cent quarter-on-quarter in July-September, the Bank of Korea said in a statement, down from 1 per cent in the previous three months.
Year-on-year expansion remained steady at 2 per cent, but BOK governor Lee Ju-yeol signalled that the overall figure for 2019 could fall below that level — for the first time since 2009, in the depths of the global financial crisis.
“For now, achieving a 2 per cent growth this year doesn’t look easy,” Lee told lawmakers.
The figures come as the world’s 11th-largest economy faces fallout from the prolonged US-China trade war while it is also mired in a standoff of its own with Tokyo stemming from wartime history.
The two neighbours have been embroiled in a dispute since July, when Japan tightened export controls on three chemicals essential to key products of South Korean tech companies such as Samsung. The central bank this month cut its key interest rate to a record low of 1.25 per cent in an effort to prop up growth. — AFP
South Korean President Moon Jae-in came to office in May 2017 with an economically unorthodox policy of “income-led growth”, promising to jump-start expansion through a series of labour-friendly policies such as wage increases.
But the International Monetary Fund this week lowered its growth forecast for South Korea to 2 per cent from its previous projection of 2.6 per cent.
Exports rose 4.1 per cent in the third quarter, the BOK said, thanks to more overseas demand for automobiles and semiconductors, but months of sharp falls at the beginning of the year hampered investment.
Private consumption grew just 0.1 per cent and construction spending dropped 5.2 per cent, it added. AFP