S.Korea Export Expansion Continues

The country’s gross domestic product posted its highest growth in more than seven years in the third quarter, on an expansion of exports and the implementation of a supplementary budget. Thanks to the steep rise, economic growth is expected to surpass 3% this year.

According to the Bank of Korea, the real GDP stood at 393 trillion won ($362 billion) in the third quarter, growing 1.5% from the previous quarter. It is 0.1 percentage points higher than the preliminary growth rate of 1.4% the bank announced on Oct. 26. It is the biggest jump since the 2010 second quarter when the real GDP rose 1.7%, Yonhap reported.

Quarterly economic growth had been below 1% since the fourth quarter of 2015, until it rebounded to 1.1% in the first quarter this year. Growth slowed to 0.6% in the second quarter, but marked a steep 1.5% jump in the third.

Behind the steep growth were exports, which jumped 6.1% from the previous quarter, marking the biggest increase since the first quarter of 2011. Semiconductors, petrochemical products and cars led the growth.

Implementation of the supplementary budget also pulled up the graph. Government consumption increased 2.3% in the third quarter, which is the steepest increase since the first quarter of 2012.

Thanks to the third-quarter jump, the economy is expected to achieve more than 3% growth this year, according to the central bank, unless it falls into negative growth in the fourth quarter.

Exports are continuing to sustain the economy. According to the trade ministry, exports increased 9.6% in November compared with the previous year, continuing their expansion for 13 consecutive months.

Thanks to the steep growth, per capita gross national income is also nearing $30,000. The real GNI totaled 411.4 trillion won in the third quarter, up 2.4% from the previous quarter.

“As the won/dollar rate has fallen and the economic growth rate has picked up, per capita income is expected to get fairly close to $30,000,” said Kim Young-tae, an official in charge of the national account at the central bank.

Since reaching $20,000 for the first time in 2006, Korea has fallen short of the $30,000 threshold for over 10 years. Last year, per capita GNI was $27,561. According to the IMF, only 27 countries had per capita GNI above $30,000 as of October last year.

The central bank data, however, showed that private consumption is still sluggish despite the economic growth. Private consumption increased 0.8% in the third quarter, compared with 1% growth in the previous quarter. Facility investment grew a mere 0.7% from the previous quarter.