South Korea Q3 growth hits 1-year low on weak net exports

SEOUL (Reuters) -South Korea’s economic growth fell to its slowest in a year in the third quarter despite slightly beating expectations, as poor net exports offset pent-up spending by consumers and companies, central bank estimates showed on Thursday.

The country’s gross domestic product (GDP) grew by a seasonally-adjusted 0.3% in real terms in the third quarter from the previous quarter, the Bank of Korea estimated, marking the slowest growth since the third quarter of 2021.

Despite managing positive growth, a breakdown of the figures showed Asia’s fourth-largest economy was losing momentum quickly in the face of cooling global demand, a wave of policy tightening worldwide and high inflation.

Net exports dragged the economy down by 1.8% as imports grew much faster than exports, offsetting pent-up private consumption and corporate investment in production facilities after most COVID-19 curbs were removed.

Economists in a Reuters poll had expected the economy to grow just 0.1% quarter-on-quarter in the July-September period, slowing from a 0.7% gain in April-June.

On an annual basis, the economy expanded by 3.1% in the third quarter after a 2.9% gain in the second quarter. The outcome was ahead of expectations for 2.8% growth.

The data came amid market speculation that the Bank of Korea may consider slowing the pace of monetary policy tightening, having already raised the policy interest rate by a total of 250 basis points since August last year.

The BOK raised interest rates by a bigger-than-usual 50 basis points early this month and flagged more to come, but a split vote prompted some commentary that the central bank could moderate the future pace of tightening.

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