The South Korean economy is estimated to have hardly grown in the third quarter and could contract in the fourth quarter amid a series of setbacks at major manufacturers and deteriorating external trade conditions that would dampen fragile domestic demand, according to private think thanks.

Leading economic think tanks including Korea Economic Research Institute, Hyundai Research Institute, and LG Economic Research Institute warned that Korea’s economy is projected to have added from 0.5 to 0.7 percent in the third quarter from the previous three-month period. They warned the pace would be close to zero percent or lower in the fourth quarter.

The local economy has been mired in a slow rut throughout the year, having grown 0.5 percent in the first and 0.8 percent in the second quarter.

Lee Geun-tae, an economist at LG Economic Research institute, projected that the country’s economy in the quarter that ended in September has done worse than the second quarter and could enter stagnation or contraction in the fourth quarter.

Economists agreed that the injection of the 38 trillion won ($33.7 billion) supplementary budget and the month-long government-sponsored nationwide discount sales in September fell short of triggering lasting recovery in domestic demand. The introduction of a powerful anti-graft law and ill fortunes at two major manufacturers - Samsung Electronics’ debacle with Galaxy Note7 and Hyundai Motor’s lengthy strike - on top of flagging shipping and shipbuilding industries also had dampened both consumer and corporate sentiment.

Hyundai Research Institute projected that Korea’s economy would have grown between 0.4 and 0.5 percent in the third quarter and near zero percent in the fourth quarter. It warned that the economy would contract 0.4 percent in the fourth quarter.

Kim Chang-bae, a research fellow at Korea Economic Research Institute, forecast that repercussions from the anti-graft law will take toll on domestic spending in the fourth quarter.

For the whole year, private economic research institutes expected the economy would grow between 2.3 percent and 2.5 percent, lower than what the government has projected - 2.8 percent by the Ministry of Strategy and Finance and 2.7 percent by the Bank of Korea.

By Cho Si-young and Na Hyun-joon

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