South Korea’s economy has expanded at a slower-than-expected pace in the July-September period due to lacklustre private consumption despite recovery in exports, central bank data showed on October 26.
The economy grew 0.3 per cent in the third quarter, compared with a 0.8 per cent growth in the second quarter and the corresponding figure of 1.7 per cent in the first quarter, preliminary data released by the Bank of Korea (BoK) showed.
The third quarter reading falls short of the BoK’s September anticipation of over 0.6 per cent growth for third and fourth quarters each, ultimately adding up to an annual four per cent growth for this year.
“Due to a resurgence of the Covid-19 virus in the third quarter has led to a slump in private consumption and disruption in the global supply of automotive chips and construction materials,” Hwang Sang-pil, chief of the BoK’s economic statistics department said in a press briefing.
“If the economy expands by 1.04 per cent quarter-on-quarter in the last quarter, then the annual growth outlook of four per cent could be achieved,” he added.
The official brushed off the slower-than-expected third quarter growth as “not a matter of big concern”, and kept an optimistic outlook on the economy.
Private consumption fell 0.3 per cent quarter-on-quarter with the third wave of the virus, compared with a 3.6 per cent gain in the previous quarter. The government adopted the toughest level of social distancing rules in Seoul and nearby areas with the daily infection count in quadruple digits since July 7.
However, the government has started to ease the restrictions since last week and plans to normalise with its “living with Covid-19” scheme, which will treat the virus like a seasonal influenza starting next month. Though some rules, such as an indoor mask-wearing rule, will remain intact, the services sector including cafes and restaurants will be able to operate around the clock under relaxed conditions.
The country’s accelerating vaccination rate is a main catalyst behind the eased restrictions, with the nation’s health authorities saying that 40.84 million people, or 79.5 per cent of the country‘s 52 million population, have received their first shots of Covid-19 vaccines since February when the country began its inoculation campaign. The number of fully vaccinated people reached 36.42 million, or 70.9 per cent.
Exports overall grew 1.5 per cent quarter-on-quarter driven by overseas demand of coal, oil and machinery products, recovering from a two per cent drop in the previous quarter. Imports, on the other hand, shed 0.6 per cent, in the same period.
According to the latest data compiled by the data compiled by the Ministry of Trade, Industry and Energy, the nation’s exports of automobiles fell more than 20 per cent last month, ending eight months of year-on-year growth, mainly due to the continuing supply shortage of automotive chips.
Outbound shipments of automobiles fell 6.1 per cent year-on-year to $3.56 billion and in terms of units, shed 20.7 per cent to 151,689 units in the cited period, data showed.
THE KOREA HERALD/ASIA NEWS NETWORK