Korean Reinsurance : · Economic Growth in the Third Quarte...

The Korean economy grew 2.7% in the third quarter of 2016 compared with the same period a year earlier, the slowest since the second quarter of 2015. The quarter-on-quarter growth rate fell to 0.7% in the July-September period from 0.8% in the previous three-month period.

Korea has recently experienced significant economic headwinds arising from some of the nation's troubled businesses, such as Samsung's smartphone recall, a labor dispute at Hyundai Motor and Hanjin Shipping's bankruptcy. These corporate woes weighed down on the nation's export-driven economy, taking a toll on manufacturing industries in particular. Overall, manufacturing output dropped 1% in the third quarter, down from the previous quarter's 1.2% growth.

Consumer spending was up 0.5% from the previous quarter due to an increase in expenditure on non-durables and services. A rise in job losses in the distressed industries such as shipbuilding and shipping hindered the recovery in consumption.

Government spending grew 1.4% quarter on quarter as public health care expenditure increased. Construction investment recorded a quarterly growth of 3.9%, reflecting a booming construction market.

In terms of year-on-year growth, construction investment expanded 11.9%. It remains to be seen, however, how long the construction sector can lead economic growth, as the government tries to hold back surging household debt.