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Q3 GDP Suggests Domestic Demand Holding Up, But Growth Momentum Still Likely To Slow


South Korean Q3 GDP rose as expected in Q3, +0.3%, although the y/y pace was slightly firmer than forecast +3.1%, (3.0% expected). We have been around this level since Q1. We might struggle to hold this pace into Q4 though, given base effects. Sentiment indicators across the consumer and business segments are also warning of slower growth conditions into year end, see the chart below.

  • The quarterly growth rate was dragged down by a larger net export fall (-1.8ppts from growth, versus -1.0ppt in Q2). The consumer held up ok though (+0.9ppt contribution, from +1.3ppts in Q2. Facilities investment ticked higher from a contribution standpoint (+0.4ppts, versus flat in Q2).
  • Outside of the net export drag, which is well established in terms of the negative terms of trade shock and slowing export growth, the domestic economy is painting a more resilient picture, for now at least.

Fig 1: South Korea GDP Y/Y Versus Manufacturing Business Sentiment

Source: BoK/MNI - Market News/Bloomberg

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