2.7 Percent Growth Rate in Second Quarter

The country`s economic growth rate in the second quarter of this year recorded only 2.7 percent due to slumping exports and corporate capital spending. This is the lowest ever since the fourth quarter of 1998, which recorded –5.9 percent, right after the foreign currency exchange crisis.

It is analyzed that such a slow growth is due to the slowdown in exports as well as in investment. Jin Nyun, Deputy Prime Minister and the Minister of Finance and Economy, mentioned that the South Korea`s Gross Domestic Product (GDP) growth rate could be 3 percent this year.

The Bank of Korea announced yesterday that the GDP increased by 2.7 percent during the second quarter of this year than the same period of the last year. The Bank of Korea anticipated 3.4 percent of growth rate at the end of June.

According to the Bank of Korea, the contribution of exports to the GDP growth rate decreased from 119.8 percent in the first quarter to 23.5 percent in the second quarter, whereas the contribution of the private consumption increased from 12.7 percent to 54.3 percent, thus, worsening the content of the growth.

Especially, facility investment, recording two-digit minus rate, worked as a factor to lower the growth rate. Moreover, the real gross domestic income (GDI) increased only by 0.5 percent in the second quarter compared with the same period of the last year.

It is anticipated that the GDP growth rate will remain in 3 percent due to the slowdown in exports, which decreased by 20 percent in July and August, and the decrease in the facility investment. This is lower than 3.8 percent forecasted by the Bank of Korea in the end of June.

Deputy Prime Minister Jin said at the breakfast lecture hosted by the Korea Junghak Institute at the Seoul Lotte Hotel yesterday that ``although the recent economic situation is bad, recording 2.7 percent of the GDP growth rate in the second quarter, it will be able to achieve 3-4 percent of the annual GDP growth rate by recording 5 percent of the GDP growth rate in the fourth quarter.``

hcs@donga.com