(Reuters) - South Korea's economic growth quickened in the third quarter led by private consumption and construction spending, but quarterly exports declined for the first time in a year in a sign of cooling global growth that should keep the door open for more monetary easing.
The economy grew a seasonally adjusted 0.9 percent in the July-September quarter from the second, the Bank of Korea's advance estimates showed on Friday, compared to a 0.5 percent rise in the second quarter and 0.9 percent growth in the first quarter.
The figure matched the median 0.9 percent forecast in a Reuters survey of 21 analysts. The data showed weaker sales abroad dampened spending on production equipment, suggesting a fragile economic recovery after growth slowed to its weakest pace in nearly two years in the June quarter - a view underscored by the central bank chief on Friday.
"South Korea is doing relatively well compared to other countries but growth is not yet firm," said Governor Lee Ju-yeol during a meeting with local conglomerate CEOs.
"Despite questions on what may happen to household debt, we lowered rates because it was important we keep the spark of recovery alive."
Asia's fourth-largest economy is seen to have passed a trough in the second quarter when growth was hit by an April ferry sinking that killed hundreds of passengers, and dented domestic travel and spending. But headwinds from slowing global growth could shackle the recovery.
The Bank of Korea has lowered interest rates by 50 basis points to a record-low 2.0 percent in two moves this year in order to rekindle momentum. After the latest cut earlier this month, the central bank gave no clear signal that its easing cycle had ended - keeping the door open for another reduction.
GLOBAL HEADWINDS
Highlighting global uncertainties, Friday's data showed exports fell 2.6 percent on-quarter in the first quarterly decline since the third quarter of 2013 when they dropped 1.1 percent. A cooling Chinese economy and the threat of recession in Europe have raised doubts about global demand.
Analysts also note that the full benefits of the BOK's monetary medicine won't be evident until the end of the fourth quarter, or early next year, due to the lagged transmission effects of the easing on the real economy.
A raft of new policies launched by Finance Minister Choi Kyung-hwan after he took office in July were also seen providing only a modest boost to growth in the third quarter, as the bulk of the measures still need parliament approval.
From a year earlier, South Korea's gross domestic product rose 3.2 percent in the September quarter, falling slightly below a median 3.3 percent rise forecast in the Reuters survey and slowing from a 3.5 percent increase in the second quarter.
The Bank of Korea also estimated private consumption gained a seasonally adjusted 1.1 percent in the third quarter after a 0.3 percent decline in the second quarter.
Construction investment also propped up growth in the third quarter, rising 2.9 percent on-quarter from a 0.4 percent rise in the April-June period. Capital investment, which analysts said was likely to have dragged down GDP growth the most in the September quarter, fell 0.8 percent. It had grown 1.1 percent in the second quarter.
reuters.com
The economy grew a seasonally adjusted 0.9 percent in the July-September quarter from the second, the Bank of Korea's advance estimates showed on Friday, compared to a 0.5 percent rise in the second quarter and 0.9 percent growth in the first quarter.
The figure matched the median 0.9 percent forecast in a Reuters survey of 21 analysts. The data showed weaker sales abroad dampened spending on production equipment, suggesting a fragile economic recovery after growth slowed to its weakest pace in nearly two years in the June quarter - a view underscored by the central bank chief on Friday.
"South Korea is doing relatively well compared to other countries but growth is not yet firm," said Governor Lee Ju-yeol during a meeting with local conglomerate CEOs.
"Despite questions on what may happen to household debt, we lowered rates because it was important we keep the spark of recovery alive."
Asia's fourth-largest economy is seen to have passed a trough in the second quarter when growth was hit by an April ferry sinking that killed hundreds of passengers, and dented domestic travel and spending. But headwinds from slowing global growth could shackle the recovery.
The Bank of Korea has lowered interest rates by 50 basis points to a record-low 2.0 percent in two moves this year in order to rekindle momentum. After the latest cut earlier this month, the central bank gave no clear signal that its easing cycle had ended - keeping the door open for another reduction.
GLOBAL HEADWINDS
Highlighting global uncertainties, Friday's data showed exports fell 2.6 percent on-quarter in the first quarterly decline since the third quarter of 2013 when they dropped 1.1 percent. A cooling Chinese economy and the threat of recession in Europe have raised doubts about global demand.
Analysts also note that the full benefits of the BOK's monetary medicine won't be evident until the end of the fourth quarter, or early next year, due to the lagged transmission effects of the easing on the real economy.
A raft of new policies launched by Finance Minister Choi Kyung-hwan after he took office in July were also seen providing only a modest boost to growth in the third quarter, as the bulk of the measures still need parliament approval.
From a year earlier, South Korea's gross domestic product rose 3.2 percent in the September quarter, falling slightly below a median 3.3 percent rise forecast in the Reuters survey and slowing from a 3.5 percent increase in the second quarter.
The Bank of Korea also estimated private consumption gained a seasonally adjusted 1.1 percent in the third quarter after a 0.3 percent decline in the second quarter.
Construction investment also propped up growth in the third quarter, rising 2.9 percent on-quarter from a 0.4 percent rise in the April-June period. Capital investment, which analysts said was likely to have dragged down GDP growth the most in the September quarter, fell 0.8 percent. It had grown 1.1 percent in the second quarter.
reuters.com
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