UOB Group’s Economist Ho Woei Chen, CFA, reviews the latest GDP results in South Korea.

Key Takeaways

“South Korea’s economy expanded by a weaker-than-expected 4.0% y/y, 0.3% q/q seasonally-adjusted in 3Q21 (Bloomberg est: 4.3% y/y, 0.6% s/a q/q; UOB est: 4.2% y/y, 0.5% q/q) as growth moderated from 6.0% y/y, 0.8% q/q in 2Q21. Despite the disappointment, the economy has continued to expand sequentially for the fifth straight quarter since its rebound from the pandemic in the second half of 2020.”

“The letdown was due to the impact of the fourth wave COVID-19 outbreak in July and global supply chain disruption.”

“The outlook for the South Korean economy has remained positive. Consumer confidence has started to recover in September after declining since the fourth wave of COVID-19 outbreak. This was supported by employment gains (total employment has risen above pre-pandemic levels) and the disbursement of cash handouts from the government’s second supplementary budget. With 70% of its population fully vaccinated, the country has planned to further ease social distancing rules in November as it moves towards the gradual return to normal life.”

“Overall, South Korea’s GDP expanded by 4.0% y/y in the first three quarters of 2021. Our full-year 2021 GDP growth forecast of 4.0% remains on track as we expect steady recovery in 4Q21.”