The Seoul skyline.
Mongkol Chuewong | Second | Getty Photos
South Korea’s fourth-quarter GDP missed estimates Thursday, with weak spot in consumption and the development sector driving progress to a six-quarter low of 1.2%, yr on yr.
Advance figures missed the 1.4% growth anticipated by economists polled by Reuters, and the expansion was additionally softer in contrast with the 1.5% rise seen within the third quarter of 2024.
On a quarter-on-quarter foundation, GDP progress additionally missed expectations, with the economic system rising simply 0.1% in comparison with the 0.2% forecast within the Reuters ballot.
Nevertheless, full-year GDP progress for 2024 got here in at 2% in contrast with final yr’s 1.4% achieve.
The South Korean received weakened 0.13% to 1,436.4, whereas the nation’s benchmark inventory index Kospi fell 0.47%.
The Financial institution of Korea mentioned that in 2024, non-public consumption progress fell and funding within the building sector declined, however authorities consumption, facility funding, and exports progress rose.
The BOK additionally mentioned that progress within the providers in addition to building trade decreased, however manufacturing trade grew at a quicker fee in comparison with final yr.
“We suspect that the weak spot in exercise might persist within the close to time period as a result of ongoing political disaster and the grim outlook for the development sector,” Shivaan Tandon, markets economist at financial information supplier Capital Economics mentioned a notice after the GDP launch.
Home demand stays the principle supply of the weak spot within the economic system, Tandon mentioned, stating that sequential progress in shopper spending slowed to only 0.2% from 0.5% within the third quarter.
He expects progress of 1.1% this yr, which is effectively beneath the BOK’s most up-to-date forecast of 1.6%-1.7% progress in 2025.
The GDP studying comes after the Financial institution of Korea made two shocking strikes in current months, first reducing charges by 25 foundation factors in late November after which holding charges in its assembly on Jan. 16 assembly. The BOK’s coverage fee presently stands at 3%.
“Draw back dangers to financial progress have intensified and the volatility of trade charges has elevated as a result of surprising political dangers which have lately escalated … export progress is anticipated to gradual and home demand is forecast to get well at a slower tempo than anticipated,” the BOK had warned after its final financial coverage assembly.
South Korea’s shopper sentiment had collapsed in December after the short-lived martial regulation declaration by impeached president Yoon Suk Yeol.
The shopper sentiment index plunged to its lowest stage since November 2022 at 88.4 in December, signaling that buyers had turned pessimistic in regards to the economic system. It is studying for the prior month had are available in at 100.7.
The index recovered to 91.2 in January, but it surely was nonetheless in need of the 100 mark that separates shopper pessimism from optimism.
— CNBC’s Anniek Bao contributed to this report.
