Exports drive Korea’s GDP rebound in Q3

02-Dec-2020 Intellasia | KoreaTimes | 6:02 AM Print This Post

The economy will show signs of steady growth in the latter half of the year, as expectations for strong exports from the manufacturing sector remain in place despite renewed fears of the further spread of COVID-19 here, the Bank of Korea (BOK) said Tuesday.

The third wave of the coronavirus is weighing on the economy again, but growing signs of a rebound in exports of chips and vehicles could offset weakening domestic demand, according to the central bank. The BOK recently revised up its third-quarter GDP growth target to 2.1 percent, a remarkable turnaround from a contraction of 3.2 percent in the previous quarter.

“We expect the economy to see a gradual improvement trajectory in the fourth quarter thanks to strong exports and equipment investment,” said Park Sung-bin, a director at the BOK’s economic statistics division. “But visible uncertainties remain over the worldwide coronavirus spread.”

Exports increased by 16 percent during the third quarter, up 16 percent year-on-year, marking the largest quarterly growth since the first quarter of 1986. The third-quarter performance was attributable to a solid recovery in overseas sales of semiconductors and cars, according to the central bank.

Experts also backed up the bank’s view, expecting the economy to continue its momentum throughout next year as there are few signs of downward pressure on exports.

“(Growth) momentum will pick up more steam when the COVID-19 vaccines are commercialised,” Noh San-ha, a macroeconomist at the Korea Capital Market Institute, said. “Hopes for the development of coronavirus vaccines cast a positive outlook for the economy’s overall rebound in 2021,” he said.

“When we take into account the statistical base effect, the economy will be able to bounce back in a steady and stable manner throughout next year.”

However, this could end up as blind optimism if vaccine development is delayed and the spread of the virus gets worse next year, he cautioned.

The central bank also said the real gross national income (GNI) jumped 2.4 percent during the July-September period from the previous quarter. This was the largest increase since the third quarter of 2017. The BOK predicted the nation’s per capita GNI would exceed $31,000 for 2020. The GNI per capita reached its peak in 2018 at $33,564, but has since been on a downward trend.

Park expects the figure to bounce back if the global economy shows signs of a recovery thanks to the possible commercialisation of COVID-19 vaccines, which will result in additional recovery in local exports and equipment investment.



Category: Korea

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