As a leading indicator of the global economy, South Korea’s economic growth rate has unexpectedly slowed to the lowest level since 2009, adding another layer of gloom to the global economy.
According to the preliminary data released by the Bank of Korea, the growth rate of South Korea’s GDP in the third quarter was only 2%, which was significantly lower than the 2.8% in the second quarter, which was less than the market expectation of 2.3%. This year-on-year growth rate is also the lowest since the third quarter of 2009.
From the ring point of view, GDP growth in the third quarter was 0.6%, which was the same as the second quarter, but also lower than the market expectation of 0.8%.
The South Korean government’s suppression of housing prices has led to a slowdown in construction activity, which has become a serious drag on the economy. Data show that South Korea’s construction investment decline in the third quarter expanded from 2.1% in the second quarter to 6.4%, the most severe contraction since the 1997-1998 Asian financial crisis.
Enterprise facilities investment is also continuing to shrink. After a 5.7% decline in the second quarter, Korean corporate facilities investment fell another 4.7% in the third quarter.
The only thing that is gratifying is that private consumption, which contributes 50% of Korea’s GDP growth, has not stalled. Data show that in the third quarter, Korean private consumption increased by 0.6%, a slight increase from the 0.3% in the second quarter.
However, analysts believe that the factors that drag South Korea’s economic growth are unlikely to change in the short term, so future economic growth is still not optimistic.
Reuters quoted Leading Investment and Securities economist Park Sang-hyun as saying that the factors that have a negative impact on the economy in the third quarter still exist, so the economic outlook for South Korea in the fourth quarter is still facing great uncertainty.
In addition, from the perspective of foreign trade, imports and exports improved in the third quarter. The growth rate of export volume rebounded from 0.4% in the second quarter to 3.9%, and the import volume shrank by 0.1%. In the second quarter, it shrank by 3%.
But Bloomberg quoted Merlist Securities economist Stephen Lee as saying that a careful study of South Korea’s foreign trade structure would have found it to be less healthy, and this unhealthy trend is expected to continue into the second half of next year.
In the view of Wall Street economists, South Korean exports are “canaries in coal mines” for the global economy and are the leading indicators of global growth. South Korea’s main export commodities include automobiles, petrochemical products, and personal consumer electronics such as mobile phones and computers. The rise and fall of South Korean exports indicates that global demand is strong or weak. At the same time, South Korea is the first country in the world to disclose the main economic data of the previous month.
In May of this year, South Korea’s exports experienced the first negative growth in 2016. Bank of America Merrill Lynch pointed out at the time that this also means that global economic growth and corporate profits are on the verge of danger, which is not good for the global market.
Although the global market plunged frequently in the last month, from the perspective of South Korea itself, the South Korean stock market has fallen sharply since June. The Korean KLCI has fallen more than 15% so far, falling more than 20% from the January high. Bear market.