South Korea's economic growth for the third quarter has revealed itself to be weaker than anticipated, despite private consumption showing signs of recovery. According to the Bank of Korea's Thursday press release, the real gross domestic product (GDP) increased by only 0.1% quarter-on-quarter. This figure fell short of analysts' expectations, which had projected a rise of 0.5%, as confirmed by a survey conducted by Reuters. Private consumption has demonstrated a modest climb of 0.5%, driven by heightened expenditure on goods and services.
However, this positive note is juxtaposed against a decline in exports, which decreased by 0.4%. The reduction in export values largely stemmed from a downturn in the motor vehicle and chemical products sectors. Moreover, imports surged by 1.5%, primarily fueled by an increase in machinery and equipment imports. The central bank has indicated that these figures may lead to a downward revision of the current year's growth outlook.
Analysts are also voicing concerns. For instance, Citi's Kim Jin-wook believes that the recent third-quarter data may prompt further rate cuts from the Bank of Korea (BOK). Kim stated, 'Weaker-than-expected economic growth data could raise the odds for the front-loading of the rate-cutting cycle, such as a back-to-back cut in November.' He also noted that the South Korean won continues to face pressure against the US dollar, suggesting a precarious state for the national currency. In light of these developments, Kim proposed that the BOK should adopt a 'wait-and-see' stance moving forward.
This approach might help mitigate any further economic turbulence while addressing the current challenges posed by external pressures and market conditions..