Economic growth of 9.6% for 2Q

As rising economic growth shows signs of slowing down, the economy is gradually entering a correctional phase.

According to a Bank of Korea announcement made on August 22, the estimated real GDP for the second quarter grew by 9.6%. But as this is a decline from the first quarter figure of 12.8%, the economy seems to be slackening.

Lee Sung-Tae, a BOK manager in charge of research, remarked that there are no indications of a drastic economic slowdown, as healthy growth is being maintained, but the economy is gradually entering a correctional phase as the growth rate is now blunted.

When excluding the seasonal factors, the seasonally adjusted real GDP figures were quite high in the first quarter of 1999 at 3.1%, 4.1% in the second quarter and 3.3% in the third quarter.

But since the fourth quarter (2.8%), the upward trend has been slacking off, with the first quarter of this year posting 1.8%.

Lee of BOK added that the economy has not reached its peak yet and that the peak will not be reached this year. Hence, a drastic economic downturn in the second half of this year is highly unlikely.

On the other hand, the GDP growth for the second quarter was favorable, with exports and recovery of facilities investments as the main boosters. Moreover, the relatively low contribution of consumption and construction investment to the GDP indicated that there is no need to worry about over-consumption.

Park Hyeon-Jin witness@donga.com