Seoul: South Korea’s economic growth slowed to a mere 0.1 percent in the third quarter of the year, falling short of expectations as exports declined, though domestic demand and facility investment showed some improvement, according to data released by the Bank of Korea (BOK).
According to Yonhap News Agency, the country’s real gross domestic product (GDP), a critical indicator of economic performance, increased by just 0.1 percent from July to September. This figure is considerably below the anticipated 0.5 percent growth and follows a 0.2 percent contraction in the second quarter, marking a significant decline from the 1.3 percent growth observed in the first quarter of the year.
On an annual basis, the economy grew by 1.5 percent in the third quarter, a slowdown from the 2.3 percent growth recorded in the second quarter. The current growth rate represents the weakest performance in three years, attributed to a downturn in exports amidst tightening global monetary policies.
South Korea’s economy expanded
by 1.4 percent last year, down from 2.6 percent in 2022 and 4.3 percent in 2021. The 2023 growth rate is the lowest since the 0.7 percent contraction experienced in 2020 amid the coronavirus pandemic. For the entire year, the BOK forecasts a slight rebound in growth to 2.4 percent.
Earlier this month, the BOK reduced its key interest rate by a quarter percentage point to 3.25 percent. This move marks the end of a prolonged restrictive policy period and comes in response to moderating inflation and weakening domestic demand. The central bank had previously implemented seven consecutive interest rate hikes from April 2022 to January 2023 in an effort to control rising inflation in Asia’s fourth-largest economy.