South Korea's economy grew 0.7 percent in the third quarter from three months earlier due to brisk exports despite lingering external uncertainties, the central bank said Thursday.
Real gross domestic product (GDP), the broadest measure of economic performance, expanded 0.7 percent on-quarter in the third quarter, slower than a revised on-quarter growth rate of 0.9 percent tallied in the second quarter, according to an advance estimate by the Bank of Korea (BOK).
The on-quarter growth was the slowest since the fourth quarter of last year when the real GDP grew 0.5 percent. From a year earlier, the real GDP advanced 3.4 percent during the July- September period, unchanged from three months before.
Despite the external uncertainties, brisk exports contributed to the continued growth of the Asia's No.4 economy. During the third quarter, concerns over the global economic downturn deepened after the U.S. credit rating was downgraded in August and Europe's debt crisis worsened.
"The nation's economic growth slowed down in the third quarter due to temporary factors such as heavy rains, the European fiscal crisis and the global stock market plunge. Those factors led to delayed capital spending by local firms and weaker private consumption," Kim Young-bae, director general of the BOK's economic statistics department, told reporters.
Kim noted the nation's annual growth rate would fall below the initially expected rate of 4.3 percent this year, but stressed that the South Korean economy could not be viewed as entering a downward phase. "The economy will show better performance in the fourth quarter helped by strong exports amid eased concerns over the external uncertainties," said Kim.
Exports, which account for about 50 percent of South Korean economy, grew 2.0 percent in the third quarter from three months earlier, up from a 1.2 percent quarterly expansion recorded in the previous quarter. From a year earlier, exports of goods and services soared 9.4 percent.
Private consumption sustained its rising trend thanks to an increased spending on durables such as automobiles and handsets as well as non-durables, including vehicle fuel, according to the BOK. Consumption in the private sector grew 0.6 percent for three months ended Sept. 30 compared with the previous period.
Construction investment expanded by 2.2 percent on-quarter in the third quarter helped by an increase in both building and civil engineering construction, but facilities investment shrank by 0.4 percent over the cited period led by a contraction in semiconductor equipment expenditures.
On the production side, output in the agriculture, forestry & fisheries industry shrank 6.1 percent on-quarter in the third quarter as farm goods cultivation was sluggish amid torrential rainfall.
However, production in the manufacturing sector grew 1.3 percent during the July-September period compared with three months earlier led by expansion in metal products and transport equipment, while the service industry advanced 0.3 percent due to production gains in finance and insurance, and information and communication sectors.
Real gross domestic income (GDI), which gauges purchasing power in accordance with changes in terms of trade, grew 0.8 percent on-quarter in the third quarter. The nation's terms of trade improved during the cited period as semiconductor export prices hit the bottom, and oil import prices fell from the peak./.