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Economy in Brief

Q4 Pick-Up in Investment Helps South Korean Economy
by Carol Stone March 24, 2004

The South Korean economy ended 2003 on a firm note as GDP grew 2.7% (seasonally adjusted) in the fourth quarter, that is, 11.3% annualized. It stood 3.9% above the fourth quarter of 2002 and for the year as a whole, GDP was 3.1% above 2002.

The Q4 performance is an encouraging sign after outright contraction early in 2003 and a modest increase in Q3. Private consumption remained weak throughout, but investment and net exports made important positive contributions. In particular, investment in machinery and equipment turned upward distinctly after three negative quarters, yielding its best outturn since early in 2000.

The upturn in growth toward year-end is reassuring for Korea, as 2003 otherwise had a lackluster performance by recent historical standards. Only 1998, in the aftermath of the Asian-wide currency crises, saw more weakness. In the absence of such cataclysmic events, 2003 was indeed sluggish, so the fourth quarter improvement is beneficial. It gives a firmer base now that the nation is beset with political uncertainty in the face of the impeachment of its president. [N.B. The Bank of Korea is revising these national accounts data, including rebasing them to 2000 prices from 1995. Not all the detail is available to us from this source yet, and the data in real terms presently begin only in 1995.]

Seasonally  Adjusted
 Quarterly % Chg
4th Qtr/4th Qtr
GDP & Selected Components
Q4-2003 Q3-2003 Q2-2003 2003 2002 2001
GDP      2.7 1.6 -0.1 3.9 7.5 4.6
   Year/Year       3.1 7.0 3.8
Private Consumption -0.5 0.3 -0.8 -2.2 5.5 7.6
Fixed Investment 3.2 -0.7 0.0 3.6 9.1 6.2
  Construction 2.6 1.7 0.7 7.4 8.4 10.7
Machinery & Equipment 4.3 -4.9 -1.0 -2.4 9.6 -1.3
Net Exports (Bil.won) SKW14.1 SKW9.3 SKW7.3 SKW37.3 SKW19.4 SKW21.1
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