GDP rebounds in the third quarter

GDP reading: Economic activity grew 0.1% on a seasonally adjusted quarter on quarter basis in the third quarter, contrasting the 0.2% contraction recorded in the second quarter but undershooting market expectations. While domestic demand improved, this was partly offset by a contraction in exports. On an annual basis, economic growth waned notably to 1.5% in Q3, following the previous quarter's 2.3% growth and marking the worst reading since Q3 2023.

Drivers: Private consumption growth grew 0.5% seasonally-adjusted quarter-on-quarter in Q3, compared to a 0.2% expansion in Q2. Public consumption recorded a 0.6% expansion in Q3 (Q2: +0.6% s.a. qoq). Fixed investment bounced back, growing 0.7% in Q3, contrasting the 1.4% contraction recorded in the prior quarter. This was driven by facilities investment among semiconductor firms. Exports of goods and services fell 0.4% on a seasonally adjusted quarterly basis in the third quarter, which was below the second quarter's 1.2% expansion. This was partly because of labor strikes hitting automobile exports. In addition, imports of goods and services growth waned to 1.5% in Q3 (Q2: +1.6% s.a. qoq).

GDP outlook: Our Consensus is for the economy to gain speed in Q4, as exports should benefit from a normalization of automobile output. Moreover, mild price pressures should aid private consumption.

Panelist insight: On the outlook, United Overseas Bank’s Ho Woei Chen said: “The outlook for private consumption is positive against the improvements in the labour market and consumer sentiment but the pace of recovery has remained slow. Further monetary policy easing in 2025 may bolster domestic demand along with the recovery in tourism above prepandemic levels by next year. Meanwhile, investments in chips manufacturing equipment are expected to stay positive, bolstered by the government’s incentives to support the industry.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Korean GDP projections for the next ten years from a panel of 30 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable GDP forecast available for Korean GDP.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Korean GDP projections.

Want to get access to the full dataset of Korean GDP forecasts? Send an email to info@focus-economics.com.