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South Korea Q4 GDP Gains 1.2% On Quarter

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South Korea's gross domestic product expanded a seasonally adjusted 1.2 percent on quarter in the fourth quarter of 2020, the Bank of Korea said in Thursday's final reading.

That beat forecasts for an increase of 1.1 percent following the 2.1 percent gain in the previous three months.

On a yearly basis, GDP was down 1.2 percent - again exceeding expectations for a decline of 1.4 percent following the 1.1 percent drop in the three months prior.

Real gross national income (real GNI) increased 1.4 percent on quarter.

On the production side, manufacturing rose 3.0 percent, mainly due to increases in chemical products and electrical equipment. Construction expanded 2.2 percent, owing to increases in building construction and civil engineering. Services grew 0.7 percent, as information and communication and human health and social work increased while restaurants and accommodations and transportation and storage decreased.

On the expenditure side, private consumption contracted 1.5 percent, as expenditures on services (e.g. restaurants and accommodation, transportation) and goods (e.g. food, clothing) both decreased. Government consumption fell 0.5 percent, with decreased expenditures on goods and health care benefits. Construction investment expanded 6.5 percent, as building construction and civil engineering increased.

Facilities investment contracted 2.0 percent due to a decrease in transportation equipment despite an increase in machinery. Exports increased 5.4 percent, as exports of goods such as semiconductors and chemical products expanded. Imports were up 2.2 percent, owing to increased imports of machinery and equipment and primary metal products.

Nominal GNI increased 1.8 percent in the fourth quarter of 2020 relative to the quarter before, with a 0.9 percent increase in nominal gross domestic product (nominal GDP) and an increase of net factor income from the rest of the world. Real GNI increased 1.4 percent compared to the previous quarter due to increases in real GDP and real net factor income from the rest of the world, despite an expansion of real trading losses. The GDP deflator increased 2.4 percent year on year.

The gross saving ratio (gross saving/gross national disposable income) stood at 37.2 percent, 1.5 percentage points higher than in the previous quarter, as the final consumption expenditure (-0.6 percent) decreased while nominal gross national disposable income (1.8 percent) increased. The gross domestic investment ratio (gross capital formation/GNDI) was 30.8 percent, maintaining the level of the previous quarter.

For all of 2020, GDP was down 1.0 percent after gaining 2.0 percent in 2019.

On the expenditure side, while the growth of government consumption continued and facilities investment turned positive, private consumption and exports reversed to a decrease. On the production side, while the decline in construction was alleviated, manufacturing and services turned negative. Real GNI fell 0.3 percent as the terms of trade improved, although real net factor income from the rest of the world decreased.

Also on Thursday, Statistics Korea said that consumer prices were up 0.5 percent on quarter in February - exceeding expectations for a gain of 0.3 percent following the 0.8 percent increase in January.

On a yearly basis, inflation was up 1.1 percent - again exceeding forecasts for a gain of 1.0 percent following the 0.6 percent increase in the previous month.

Core CPI was up 0.1 percent on month and 0.3 percent on year after adding 0.4 percent both on month and on year in January.

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