Q3 GDP Announcement on 27th... Expected Positive Turnaround with Mid-to-High 1% Growth Rate

[Asia Economy Reporter Eunbyeol Kim] The economic growth rate, which plummeted due to the shock of the novel coronavirus infection (COVID-19), is expected to turn positive in the third quarter. With exports performing relatively well, the growth rate is estimated to have recorded a mid-to-high 1% (quarter-on-quarter) in the third quarter.

South Korea's quarterly economic growth rate is announced as the increase rate of Gross Domestic Product (GDP) compared to the previous quarter. Since the growth rate fell to -3.2% in the second quarter due to the peak impact of COVID-19, it was already anticipated that the growth rate would turn positive in the third quarter as the spread subsided. However, due to the resurgence of COVID-19 and slow consumption recovery, the growth rate is expected to recover only about half of the decline seen in the second quarter.

The Bank of Korea will announce the third quarter GDP growth rate on the 27th. According to a survey conducted by Bloomberg targeting economic experts, the third quarter growth rate is estimated to have risen 1.8% quarter-on-quarter. This figure, compiled between the 9th and 14th of this month, reflects the impact of the COVID-19 resurgence. However, considering that their forecast for South Korea's annual growth rate is -1.1%, which is 0.2 percentage points higher than the Bank of Korea's forecast of -1.3% at the end of August, the actual third quarter growth rate is likely to be in the mid-1% range.

Previously, the Bank of Korea's forecast for this year's annual growth rate was -1.3% year-on-year. On the 14th, Bank of Korea Governor Lee Ju-yeol stated, "We judge that the future growth trend generally aligns with the August forecast path." To achieve this year's annual growth rate forecast (-1.3%), growth rates of about 1.3% each in the third and fourth quarters are required. However, this is a simple calculation, and considering that the growth rate compared to the previous quarter is expected to be higher in the third quarter, the third quarter is forecasted to have a mid-to-high 1% growth rate, and the fourth quarter around a low 1% growth rate.

South Korea's monthly export figures showed a sharp decline of -25.6% year-on-year in April and -23.8% in May, but the decline gradually narrowed to -10.8% in June, -7.1% in July, and -10.2% in August. Last month, exports increased by 7.7%, turning positive. As external trade conditions improve, exports are gradually recovering. Ultimately, the resurgence of COVID-19, which is causing consumption to contract, is expected to act as a variable.

This content was produced with the assistance of AI translation services.