GDP Decline
The Bank of Korea announced on January 26 that Korea’s GDP increased by 0.6% from a quarter ago in the last quarter of 2015. The GDP growth rate exceeded 1% for the first time in six quarters in the previous quarter, based on the Korean government’s aggressive stimulus policy, but fell below 1% again in Q4. In 2015, the GDP growth rate reached a three-year low of 2.6%, falling short of the 3% mark for the first time in two years.
Such a decline was because of a rapid decrease in construction investment above anything else. In Q4, 2015, the amount of the investment fell 6.1% from a quarter earlier, causing the GDP growth rate to fall by 0.9 percentage points.
The total export increased by 2.1% during the same period but its contribution to GDP growth decreased by 0.2 percentage points, showing a decline for seven quarters in a row. The facility investment edged up by only 0.9%, about half of that of the preceding quarter, due to a decrease in investment in machinery and the like.
Nevertheless, the private consumption showed a growth of 1.5% on the back of the Korean Black Friday event in October. The contribution of inventory to GDP growth rose by 0.5 percentage points to 0.7 percentage points as the import of crude oil increased based on the low international oil prices.