By Kim Jae-kyoung
Staff Reporter

South Korea recorded lower-than-expected economic growth of 2.3 percent in the third quarter of this year from a year ago due to contraction in private and corporate spending, the Bank of Korea (BOK) reported on Friday.

Cumulative GDP growth for the first nine months, as a result, came to 2.6 percent, far below BOK’s annual goal of 3.1 percent.

The third-quarter GDP growth was up from 1.9 percent in the second quarter, but below the central bank’s earlier projection of 2.7 percent. GDP is a measure of the total market value of all final goods and services produced in a country

``A slump in private consumption and facility investments has dampened the growth,’’ BOK director general Cho Sung-jong said at a news conference.

Private spending declined 1.9 percent in the third quarter, the second consecutive quarter of contractions. Consumption shrank 2.2 percent in the second quarter.

Corporate capital spending also contracted 4.7 percent in the third quarter, compared with the second quarter’s 0.8 percent decline.

But the central bank said that exports and manufacturing output have remained robust, heightening expectations of an imminent economic upturn.

``The economy has clearly improved in the third quarter from the second quarter and is expected to pick up further in the last quarter fueled by brisk exports,’’ Chung said.

He pointed out that GDP grew 1.1 percent in the third quarter from the previous quarter on a seasonally adjusted basis, reversing a 0.7 percent fall in the second quarter.

Exports jumped 16.8 percent in the third quarter from a year ago on the back of brisk shipments of semiconductors, communications equipment and computers. Exports increased 25 percent in October and 20 percent for the first 20 days of this month.

Exports contributed 103.9 percent to the GDP growth in the third quarter, up from 107.8 percent a quarter before, while domestic demands’ contribution ratio stood at minus 30.9 percent from the prior quarter’s minus 7.8 percent.

Market experts said that although the economy has shown signs of recovery owing to strong exports, it is unlikely that the economy will achieve the annual goal of 3.1 percent.

``To attain its 3 percent annual growth target, the economic recovery should be led by both consumption and exports,’’ Samsung Economic Research Institute economist Kwon Soon-woo said.

``But consumption recovery was still missing in November data and the trend is expected to continue for the time being,’’ he added. ``The economy will get back on the track to full recovery only when domestic demand picks up.

He pointed out that the biggest threat to an early economic recovery is instability in financial markets caused by credit card problems and slush fund scandals, adding that if such unrest continues, it would deal a blow to the overall economy.

In the meantime, real gross domestic income (GDI) increased 1.1 percent in the third quarter from a year ago.

kjk@koreatimes.co.kr