South Korea’s real GDP grew slower than those of the U.S., China and Japan in the second quarter of this year. During the period, South Korea’s real GDP growth rate fell short of the G20 average and the OECD average.
The OECD announced on September 30 that South Korea showed a quarter-on-quarter real GDP growth of 0.6% in the second quarter whereas the figures were 1.0%, 1.8% and 0.7% for the U.S., China and Japan, respectively.
In the first quarter, Korea's GDP grew 1% quarter on quarter, higher than the 0.5% for the U.S., 1.4% for China and negative 0.2% for Japan.
The G20 countries posted an average real GDP growth of 1.0% in the second quarter after 0.9% in the previous quarter. OECD member countries’ average rose from 0.53% in the first quarter to 0.7% in the second quarter.
South Korea’s underperformance can be attributed to a decline in investment and major industries’ slumps. According to the Bank of Korea, South Korea’s capital expenditures showed a quarter-on-quarter decline of 5.7% in Q2. Likewise, its construction investment fell 2.1%. The local manufacturing sector’s growth rate was 0.6%, down 1.0 percentage point from the previous quarter. The local construction sector’s growth fell from 2.1% to negative 3.1%.
The OECD said in May this year that the South Korean economy would grow 3.0% in 2018 and 2019 each. More recently, the organization lowered the estimates to 2.7% and 2.8%. The Bank of Korea is scheduled to release its economic forecasts on October 18 and the economic growth rate and employment index in the data are likely to be more conservative than those announced in July.