South Korea's economy recorded a growth rate of 1.0% in the third quarter, driven by strong semiconductor exports and facility investment. This marks an increase from the 0.6% growth in the second quarter, indicating a solid growth trend.
Notably, the surge in semiconductor exports led to a significant rise in Real Gross Domestic Income (GDI), which saw its year-on-year growth rate reach the highest level in nearly 49 years. However, private consumption declined, suggesting that the recovery in the economy has not yet translated into broader consumer spending.
The Bank of Korea reported on October 27 that the real Gross Domestic Product (GDP) growth rate for the third quarter was 1.0%, up 0.4 percentage points from the previous quarter's growth rate of 0.6%.
The quarterly growth rate rebounded sharply from a contraction of -0.1% in the fourth quarter of last year to 1.8% in the first quarter of this year, followed by 0.6% in the second quarter and 1.0% in the third quarter, marking three consecutive quarters of positive growth.
The third quarter growth rate is the highest since the first quarter of this year (1.8%). Compared to the same period last year, the economy grew by 3.4%, showing a slight slowdown from the growth rates of 3.8% in the first quarter and 3.7% in the second quarter.
By sector, private consumption fell by 0.2%, driven by declines in the consumption of goods such as automobiles and electronics, as well as services like finance and food. This marks a reversal from a 0.4% increase in the second quarter.
In contrast, government consumption increased by 1.9%, supported by higher spending on goods and health insurance benefits. Construction investment rose by 0.7%, recovering from a 0.1% decline in the previous quarter.
Facility investment surged by 4.1%, primarily in machinery for semiconductor manufacturing, significantly exceeding the 0.2% growth rate in the second quarter. Investment in intellectual property products also increased by 2.3%, driven by growth in research and development and software investments.
Exports rose by 2.3%, led by semiconductors, machinery, and electrical equipment, marking an increase from 1.3% in the second quarter. Imports also grew by 2.4%, primarily due to increases in crude oil and machinery for semiconductor manufacturing.
In terms of contributions to the third quarter growth rate, domestic demand, including consumption and investment, contributed 0.9 percentage points, up from 0.3 percentage points in the second quarter. However, the contribution from net exports (exports minus imports) decreased to 0.1 percentage points from 0.3 percentage points in the previous quarter.
While private consumption pulled down the growth rate by 0.1 percentage points, government consumption raised it by 0.3 percentage points. Facility investment contributed 0.4 percentage points, and construction investment added 0.1 percentage points. Investment in intellectual property products boosted the growth rate by 0.2 percentage points.
By industry, manufacturing increased by 2.0%, driven by computers, electronics, and optical equipment, an improvement from 1.4% growth in the second quarter.
The construction sector also saw a 2.0% increase, rebounding from a 1.9% decline in the second quarter. Agriculture, forestry, and fisheries grew by 5.9%, while the electricity, gas, and water supply sector increased by 3.7%.
The service sector grew by 0.2%, led by business services, information and communication, and transportation, although this was a slowdown from 1.0% growth in the second quarter.
In the third quarter, Real Gross Domestic Income (GDI) increased by 18.8% compared to the same period last year, marking the highest growth rate since the fourth quarter of 1977 (19.0%).
The year-on-year growth rate of Real GDI has risen from 13.2% in the first quarter and 15.7% in the second quarter to 18.8% in the third quarter. Compared to the previous quarter, it increased by 3.4%, significantly outpacing the real GDP growth rate of 1.0%.
Real GDI is an indicator of the purchasing power of income earned through domestic production activities, reflecting changes in trade conditions and real trade gains in its calculation.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.