Korean Economy, Construction & Lumber Shipments
South Korea’s economic growth hit a seven-year record high in the third quarter of 2017 mainly due to increased construction investment and exports.
South Korea’s gross domestic product in the third quarter increased 1.4% from the previous quarter, faster than the previous quarter’s 0.6% on-quarter gain and improved 3.6% from a year earlier.
Government spending increased by 2.3% in the third quarter, the highest since the first quarter of 2012, when it came to 2.8% and construction investment grew 1.5%, faster than the previous quarter’s 0.3% on-quarter gain.
On the back of rising global demand, exports, South Korea’s key economic driver, grew a solid 6.1%, the highest since the first quarter of 2011.
However, South Korea’s private consumption has remained in the doldrums for months as consumer sentiment dropped for two straight months to a five-month low of 107.7 in September. Consumer prices continued their sharp growth in September to 2.1% from a year earlier due to high-flying food prices.
South Korea’s jobless rate stood at 3.4% in September, down 0.2 percentage point from a year ago.
The exchange rate for Canadian Dollar averaged at 903.08 won in the third quarter of 2017, up by 4.95% from 860.47 in the second quarter of 2016 and also down by 7.40% from 840.88 in the previous quarter.
In early September, the South Korean government announced a fresh set of regulations to cool down the overheated housing market, a month after in October adopting strong measures for Seoul and other cities. Household loans in South Korea accounted for 95% of all household debt, which stood at 1,388 trillion won (US$1.23 trillion) as of the first half of 2017. Mortgage loans took up 54% of all household loans.
Amid ongoing government intervention to limit the supply of new homes, especially new apartment in Seoul, South Korea’s housing starts in number of buildings in the first eight months of 2017 decreased 14.3% to 67,077 buildings from a year earlier 78,264 buildings while that in number of units significantly decreased 22.4% to 311,098 units from a year earlier 400,898 units. Housing permits in number of buildings and units for the same period of 2017 also decreased 9.7% and 15.9% respectively to 79,999 buildings and 396,469 units from a year earlier 88,614 buildings and 471,528 units. This downward trend in both housing starts and permits is set to be precipitated by the government’s measures aimed at curbing rising house prices and a planned cut in public infrastructure spending.
While the overall residential construction sector struggles, the number of wood building permits in the eight months of 2017 increased 3.0% to 11,588 buildings from a year earlier. However, the number of wood building starts for the same period decreased 6.3% to 9,317 buildings.
Total floor areas of wood building permits for the same period in 2017 increased 6.6% to 1,060,196 m2 but that of wood building starts slightly decreased 3.6% to 866,930 m2 from a year earlier.
Owing to the increased percentage use of Canadian lumber in wood building sector and price competitiveness of Canadian lumber resulted by 0% tariff as a benefit of the CAN-KOR FTA, BC softwood lumber export volume to South Korea for the first eight months of 2017 increased 5.7% to 196,631 cubic meters as compared to 186,005 cubic meters for the same period of 2016.
Export value for the same period also increased 17.3% to CAD$56.954 million as compared to CAD$48.559 million for the same period in 2016.