South Korea's economic growth rate hovered low in the third quarter on the investment slump, caused by the lingering uncertainty at home and abroad, central bank data showed Thursday.
Real gross domestic product (GDP), adjusted for inflation, amounted to 400.2 trillion won (351.4 billion U.S. dollars) in the July-September quarter, up 0.6 percent from the previous quarter, according to the Bank of Korea (BOK).
It was in line with market expectations. The growth rate was on the decline this year from 1.0 percent in the first quarter to 0.6 percent in the second and the third quarters.
Export, which accounts for about half of the export-driven economy, expanded 3.9 percent in the third quarter from three months earlier, leading the quarter's growth.
Private consumption, another growth engine of the economy, added 0.6 percent on robust demand for cosmetics and clothing, posting a modest increase.
Fiscal spending gained 1.6 percent as the government increased the public health insurance benefits.
Facility investment, however, declined 4.7 percent in the third quarter from the prior quarter, keeping a downward trend for the second consecutive quarter.
Investment in the construction sector tumbled 6.4 percent, marking the fastest reduction since the second quarter of 1998.
Import shed 0.1 percent in the quarter on soft demand for machinery.
Local companies refrained from making new investment and expanding workforce amid the lingering external risk factors, such as the trade conflict among major economies and the expected rate hike in the United States.
The BOK revised down its growth outlook for this year to 2.7 percent earlier this month from 2.9 percent estimated three months ago, citing the soft investment and the weak domestic demand.
The BOK has not changed its policy rate since the bank raised it to the current level in November last year from an all-time low of 1.25 percent.
The U.S. Federal Reserve lifted its benchmark rate in September to a range of 2.00-2.25 percent, widening the gap in interests between South Korea and the United States. The Fed was widely forecast to raise it further in December.
If the BOK's rate increase is belated, foreign capital could abruptly flow out of the South Korean financial market.
However, the BOK's tightened monetary policy would increase the debt-servicing burden for households that have rushed to purchase new homes with borrowed money amid the protracted trend of low borrowing costs.
By industry, production in the manufacturing sector expanded 2.3 percent in the third quarter from the prior quarter, the highest in four quarters.
Production in the construction sector plunged 5.3 percent, marking the highest fall in about 20 years.
Services industry output was up 0.5 percent in the third quarter, posting an identical figure to the previous quarter.
