Supply Chain Shock and 4th Wave... Q3 GDP Growth at 0.3% (Update)

Announcement of '2021 Q3 Real GDP (Preliminary)' on the 26th

[Asia Economy Reporter Jang Sehee] Due to the shock of the fourth wave of COVID-19, the Korean economy grew by 0.3% in the third quarter. This was influenced by an expanded decline in investment and a decrease in private consumption. If a growth rate of 1.0% is maintained in the remaining fourth quarter, it is expected that an annual growth rate of 4.0% can be achieved this year.

According to the '2021 Q3 Real Gross Domestic Product (GDP, preliminary)' data released by the Bank of Korea on the 26th, GDP in the third quarter grew by 0.3% compared to the previous quarter. Looking at the quarterly growth rates, it has shown a continuous decline for three consecutive quarters after recording 1.7% in Q1 and 0.8% in Q2 this year. This is the lowest since Q2 last year (-3.2%).

This growth was largely affected by an expanded decrease in construction investment and a slowdown in private consumption.

Construction investment decreased by 3.0%, mainly in civil engineering construction, marking the lowest since Q3 last year (-3.9%). Construction investment recorded a 1.3% increase in Q1 but turned to a 2.3% decrease in Q2. Facility investment decreased by 2.3% due to a reduction in transportation equipment. This is the lowest since Q1 2019 (-8.3%).

Private consumption, which had briefly revived in Q2, decreased by 0.3% compared to the previous quarter due to reductions in food and accommodation, and entertainment and culture, turning negative again after two quarters. However, government consumption increased by 1.1%, mainly due to spending on goods.

Exports, the backbone of the Korean economy, increased by 1.5%, centered on coal and petroleum products, machinery, and equipment. Exports turned to an increase again after recording a negative growth of -2.0% in Q2. The growth contribution of net exports was 0.8 percentage points. Imports decreased by 0.6% due to a reduction in transportation equipment and others.

The growth rate in Q3 was 4.0% compared to the same period last year. Real Gross Domestic Income (GDI) increased by 0.3%.

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