Macmillan Jones - South Korea's Economic Expansion Falls Short of Predictions

Macmillan Jones - South Korea's economic expansion slows amid global financial market turmoil.

South Korea’s economy expanded at a slower pace than Macmillan Jones analysts had predicted for the third quarter and was in line with growth during the second quarter of this year. Macmillan Jones analysts say this slower than anticipated growth could be attributed to a sharp decline in domestic investment which countered the positive impact of state stimulus and robust exports.

As government measures to regulate rising property prices led to fewer homes being built, investment in construction decreased by 6.4 percent in the third quarter, making it the biggest decline since the Asian financial crisis in the late nineties.

Macmillan Jones analysts say that according to data released by the Bank of Korea, GDP expanded by a seasonally adjusted 0.6 percent, falling short of the predicted 0.7 percent gain.

However, private consumption, which makes up almost 50 percent of the country’s GDP, improved marginally boosting overall growth. Private consumption increased by 0.6 percent in the third quarter, up from 0.3 percent in the second quarter.

Analysts at Macmillan Jones blame turmoil in the global financial markets and uncertainty about future trade prospects for the less positive outlook. They say that the factors which impacted Q3 growth are still in play and make prospects for the current quarter uncertain.

South Korean companies have been hesitant to increase investment while global demand is uncertain. Builders in the property sector have reduced capital outlay due to state restrictions in the property market while low employment figures have caused consumers to rein in spending.

Source: Macmillan Jones

Categories: Consumer Goods

Tags: Macmillan Jones, MacmillanJones, South Korea economy

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