October 23, 2018 / 7:58 AM / a month ago

South Korea third-quarter GDP growth seen ticking up but consumer sector looks sluggish: Reuters poll

SEOUL (Reuters) - South Korea’s economy likely grew faster in the July-September period than the previous quarter, a Reuters poll showed, with government stimulus and foreign demand for memory chips expected to offset weak consumer and property sectors.

FILE PHOTO: A man using his mobile phone walks on a zebra crossing at a business district in Seoul, South Korea, March 23, 2016. REUTERS/Kim Hong-Ji/File Photo

Gross domestic product for the third quarter is expected to have expanded a seasonally adjusted 0.7 percent from the previous quarter, just above the 0.6 percent gain in the second quarter, the median forecast from the survey of 11 analysts showed on Tuesday.

The data comes amid heightened concerns among policymakers about the worsening trade war between China and the United States, which threatens to hurt the global trade outlook.

The survey showed growth in annual terms, however, likely slowed to a median 2.2 percent from 2.8 percent in the second quarter. The moderation in growth is partly due to the above-trend expansion seen in the comparable period last year.

Additionally, the Chuseok public holiday fell in September this year, whereas it took place in October last year, leading to fewer working days during this year’s third quarter.

Demand for South Korea’s computer memory chips and petroleum products likely supported exports. That, combined with an estimated rise in government spending, was expected to have largely offset weak domestic corporate and consumer spending, analysts said.

Analysts said companies have been reluctant to boost investment on concerns about global demand. In the property market, builders have cut spending due to government curbs in the housing market while weak employment prospects have prompted consumers to cut spending.

“Both facility investment and construction investment are expected to show sluggish performance for September and the current quarter as a whole,” said An Young-jin, an analyst at SK Securities.

The central bank last week downgraded its growth forecast for the whole of this year to 2.7 percent from an earlier projection of 2.9 percent, citing weak corporate and construction investment.

If growth that meets Reuters’ median forecast, it would keep the economy on track to meet the Bank of Korea’s full-year projections.

Additional reporting by Joori Roh, Jeongmin Kim and Yuna Park; Editing by Choonsik Yoo and Sam Holmes

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