On the expenditure side, private consumption expanded by 0.5 percent (+1 percent in Q2) as expenditures on both non-durable goods and services increased. Government consumption grew by 1.4 percent (+0.1 percent in Q2), with an increase in health insurance benefits. Fixed investment expanded by 2.1 percent (from +2.7 percent in Q2): Construction investment was up by 3.9 percent (+3.1 percent in Q2), with investment in both residential and non-residential building construction increased; while facilities investment contracted by 0.1 percent (+2.8 percent in Q2), mainly due to a decline of investment in transport equipment. Exports expanded by 0.8 percent (+1.1 percent in Q2), with increases in exports of semiconductors and chemical products. Imports also rose by 2.4 percent (+2.1 percent in Q2), owing to expansions in imports of machinery and equipment and overseas consumption by residents.
On the production side, manufacturing decreased by 1 percent (+1.2 percent in Q2), mainly with respect to the production of transport equipment and electronic and electrical equipment in a wake of Samsung’s Galaxy Note 7 recalls and a strike at Hyundai plants. Electricity, gas and water supply rose by 6.9 percent (+0.3 percent in Q2), as the volume of electric power sold increased due to a heat wave. Construction grew by 4.4 percent (+1 percent in Q2), led by an expansion of building construction. Services expanded by 1 percent (+0.6 percent in Q2), as health and social work, and real estate and leasing increased.
Compared with the same period of 2015, the economy expanded by 2.7 percent, slowing from a 3.3 percent growth in the previous period but better than market expectations of a 2.6 percent expansion.