Growth Continuing Below 1%
The Bank of Korea announced on September 2 that South Korea’s GDP is estimated to have totaled 375.3336 trillion won in the second quarter of this year, up 0.8% from the previous quarter.
If so, South Korea’s GDP growth rate remains below 1% for the third consecutive quarter. Its GDP growth rate was 0.7% in Q4, 2015 and 0.5% in Q1, 2016. It rebounded to 1.2% in the third quarter of last year but had remained below 1% for the five preceding quarters.
The quarter-on-quarter increase between April and June 2016 was led by domestic consumption. It decreased by 0.2% between January and March but increased 1.0% in the second quarter based on the extension of individual consumption tax cut and special holidays in May. In the meantime, the contribution of net exports to economic growth declined from 0.8 percentage points to negative 0.3 percentage points between the first and second quarters of this year.
The manufacturing sector recorded a growth rate of 1.2% in the second quarter, 1.4 percentage points higher than that posted in Q1. This was led by coal, petroleum products and chemical products that benefitted from a slight rebound in oil prices. Residential building construction led a 1.0% growth in the construction sector as well although the growth rate reached as high as 4.8% in the previous quarter. Wholesale and retail services, dining and accommodation services and cultural services led a 0.6% growth in the service industry, where transport and warehousing, real estate services and the like recorded a negative growth.
The country’s real GNI fell 0.4% quarter on quarter with oil prices rebounding and corporate dividend payment increasing. Such a decline in real GNI was for the first time in seven quarters.