Gross domestic product fell 0.2 percent from the previous quarter, marking the country’s second economic contraction in just three quarters. The latest reading sharply contrasts with the central bank’s earlier forecast of 0.2 percent growth and raises fresh doubts about the viability of its full-year growth target of 1.5 percent.
The bank attributed the downturn to a confluence of headwinds, including prolonged political uncertainty, anxiety over U.S. trade policy, record-setting wildfire damage, and a temporary halt in operations at multiple construction sites.
Private consumption edged down 0.1 percent as households cut back on entertainment, cultural activities, and medical services. Government spending also dipped 0.1 percent, largely due to reduced healthcare expenditures.
The steepest declines came from investment. Construction investment plunged 3.2 percent — with building construction particularly hard hit — while facilities investment fell 2.1 percent, driven by reduced spending on machinery, including semiconductor manufacturing equipment.
Exports, a key pillar of South Korea’s economy, slipped 1.1 percent amid weak demand for chemical products, machinery, and industrial equipment. Imports fell more sharply, declining 2.0 percent, mainly due to decreased purchases of crude oil and natural gas.
Among industry sectors, electricity, gas and water services posted a robust 7.9 percent gain, while agriculture, forestry and fishing rose 3.2 percent, buoyed by strong performance in the fishing industry.
Real gross domestic income, a measure of purchasing power, declined 0.4 percent, underscoring the mounting challenges facing Asia’s fourth-largest economy.
reporter
Kim Dong-young
davekim0807@ajupress.com
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