The gross domestic product (GDP) of South Korea is expected to have slowed significantly in the fourth quarter (Q4) as October’s national holiday weighed on factory output.
The economic growth was expected to have grown just 0.1 per cent in the Q4 from a quarter earlier, a big step down from the third quarter’s 1.5 per cent rise, a survey of 10 economists found.
The Reuters poll found that GDP growth was seen expanding 3.1 per cent in the fourth quarter from a year earlier, also slowing down from 3.8 per cent growth in September quarter.
Lee Sang-jae, an economist at Eugene Investment & Securities, said, “Weaker factory output due to the long Chuseok holiday (in October) seems to have pressured overall economic growth.”
“Domestic consumption will continue its recovery, but tougher housing rules would have had a negative impact on capital and construction investment in the last three months,” Lee added.
Factory output barely rebounded in November after contracting in holiday-shortened October at the sharpest rate since 2013.
South Korea said in October that it would impose mortgage curbs on owners of multiple homes to put a brake on binge borrowing, starting this year.
Poll respondents noted that robust exports, which have risen for 14 straight months, kept year-on-year growth at around 3.0 per cent.
South Korea’s exports surged 8.9 per cent in December, lifting 2017 shipments to the highest on record in value terms, thanks to soaring global demand for memory chips and petrochemicals.
At its January policy meeting the Bank of Korea upgraded its growth outlook to 3.0 per cent from the 2.9 per cent forecast in October, citing improving private consumption.
The BOK kept interest rates unchanged at its meeting last Thursday after raising them in November for the first time in more than six years.