Korea's economy grew 1.1% in 3Q

Better than market's forecast.

According to DBS, this morning’s data showed that the economy grew 1.1% QoQ sa in 3Q, better than the consensus and its forecast of 0.8%. In the annualized terms, GDP growth decelerated only slightly compared to the previous quarter, from 4.5% to 4.3% (QoQ saar).

Here's more from DBS:

Despite the reduction of fiscal stimulus, the private sector demand has continued to hold up very well. Private consumption expenditures grew an impressive 4.3% QoQ saar, the fastest rate over three years.

Gross fixed capital formation sustained a positive growth for the third consecutive quarter, with facilities investment and construction investment respectively rising 5.0% and 11.1%. Government consumption, on the other hand, slowed sharply to 0.3% from 7.4% on average in 1Q-2Q.

In the first three quarters this year, GDP growth has averaged 4.1% QoQ saar, fairly in line with the long-term growth trend of 4%. The Korean economy has coped well with the external challenges this year including China’s slowdown, Japan’s currency devaluation and capital outflows from the emerging markets.

The continuation of steady growth demonstrates the country’s export competitiveness, improvement in financial stability, resilience of domestic demand and the appropriate policy management.

With the Chinese economy exhibiting signs of bottoming-out and the US’s QE tapering being postponed, the short-term global outlook appears improving slightly.

October’s economic data released next week are expected to show a rebound in Korea’s export growth to 2% YoY from -1.5%, and a rise in PMI to 50 from 49.7.

We forecast that GDP growth will stay solid at 3.5%-4.0% QoQ saar in 4Q. In the yearon- year terms, the full year growth in 2013 should easily match our forecast of 2.8%.

Forecast for 2014 currently remains unchanged at 3.5%.This morning’s data showed that the economy grew 1.1% QoQ sa in 3Q, better than the consensus and our forecast of 0.8%. In the annualized terms, GDP growth decelerated only slightly compared to the previous quarter, from 4.5% to 4.3% (QoQ saar).