"Korea, Government Consumption, Private Consumption, and Investment All Decline Together... The Only Country Among Top 30"

[Image source=Yonhap News]

In the second quarter of this year, the real growth rates of private consumption, government consumption, and investment in South Korea all declined. Among countries ranked within the top 30 in the world by economic size, South Korea was the only country to experience simultaneous declines in both consumption and investment indicators.

According to data compiled by Jin Sun-mi, a member of the National Assembly's Planning and Finance Committee from the Democratic Party of Korea, using information from the Bank of Korea, the World Bank, the Organisation for Economic Co-operation and Development (OECD), and the International Monetary Fund (IMF), South Korea's consumption and investment indicators both fell in the second quarter of this year.

Private consumption amounted to $206.53 billion, a decrease of $5.35 billion compared to the previous quarter, while government consumption was $79.04 billion, down by $4.91 billion. Gross fixed capital formation decreased by $4.55 billion to $136.02 billion.

Looking at the real growth rates, private consumption fell by 0.1% quarter-on-quarter, government consumption decreased by 2.1%, and gross fixed capital formation declined by 0.1%. Representative Jin explained, "During the same period, South Korea was the only country among the top 30 economies to experience a decline in real growth across all three sectors: consumption and investment."

As of the end of September this year, the integrated fiscal balance recorded a deficit of 31.2 trillion won, and the managed fiscal balance showed a deficit of 70.6 trillion won. The total expenditure progress rate compared to the original budget was 73.2%, the lowest level since tracking began in 2014.

Photo by Younghan Heo younghan@

According to the IMF, South Korea's total expenditure this year decreased by 56 trillion won (-9%) compared to the previous year, and total revenue fell by 4.88 trillion won (-8.3%). The reduction in total expenditure was the largest among the top 20 economies for which data is available.

Representative Jin stated, "The IMF projects that South Korea's total expenditure and total revenue growth rates for 2024 will be approximately 3.1% and 4.5%, respectively. Considering the significant fiscal contraction this year, recovering fiscal capacity will not be an easy task."

Regarding the IMF's forecast for global economic growth this year, South Korea's growth projection was revised down by 0.6 percentage points from 2.0% in October last year to 1.4% in October this year. In contrast, the global growth forecast rose from 2.7% to 3.0% during the same period. The advanced economies group saw an increase from 1.1% to 1.5%.

By country, the United States' forecast increased from 1.0% to 1.5%, Japan's from 1.6% to 2.0%, the United Kingdom's from 0.3% to 0.5%, and the Eurozone's from 0.5% to 0.7%.

Since South Korea's growth rates for the first through third quarters were 0.3%, 0.6%, and 0.6%, respectively, the fourth quarter performance will need to exceed 0.7% for the annual growth rate to reach 1.4%.

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