Jul-Sep 2021 1st Preliminary GDP Estimate

◆The real GDP growth rate for Jul-Sep 2021 (1st preliminary est) fell below market expectations, coming in at -3.0% q/q annualized (-0.8% q/q). Motor vehicles suffered major production cuts due to the shortage of semiconductors and the spread of COVID-19 in Southeast Asia, important suppliers of parts, causing a deterioration of the economy. In addition, the declaration of emergency and special stricter measures, which were applied until September 30, had the effect of holding down domestic economic activity.

◆The outlook for the real GDP growth rate in the Oct-Dec period sees growth of around +8% q/q annualized based on the assumption that economic activity will return to normal, while motor vehicle sales are expected to recover with the problem of supply constraints moderated, and personal consumption will likely expand centering on services and durable consumer goods. Growth in demand components such as exports and capital investment are expected to boost the recovery to nearly the level seen in the Oct-Dec period of 2019 before the COVID-19 pandemic hit. The major downside risk will continue to be the trend in the spread of mutant variants of COVID-19, especially ones that could weaken the preventive capabilities of the vaccine. This is a factor which will require continued vigilance.