South Korea’s economy grew at its fastest pace for more than seven years in the third quarter, official figures showed yesterday, as Asia’s economies lead the world out of its slump.
GDP rose 2.9 percent quarter-on-quarter in July-September and 0.6 percent compared with a year earlier, the central Bank of Korea said in an advance estimate.
The quarter-on-quarter growth was the country’s fastest since 3.8 percent in January-March 2002.
Asia’s fourth-biggest economy had recorded a 2.6 percent gain quarter-on-quarter in April-June but the figure represented a 2.2 percent contraction year-on-year.
On a year-on-year basis, yesterday’s figures showed that GDP turned positive for the first time in four quarters.
“Industrial output, led by chips and automobiles, posted robust growth in the third quarter,” the bank said in a statement. “Private consumption and facility investment also grew, contributing to growth.”
Amid a global recession sparked by the financial crisis, the economy had tumbled 5.1 percent quarter-on-quarter in the last three months of last year before rising 0.1 percent in January-March.
Its recovery has been fueled by aggressive government fiscal spending and rate cuts. Exports have profited from the local currency’s sharp drop against the US dollar until recently, and overseas stimulus programs.
Exports rose 5.1 percent quarter-on-quarter in the three months ending on Sept. 30, after jumping 14.7 percent in the second quarter. Private spending increased 1.4 percent compared with a 3.6 percent gain in the preceding quarter.
Capital investment climbed 8.9 percent after rising 10.1 percent in the second quarter, while construction investment declined 2.1 percent compared with a 1.7 percent expansion three months earlier.
The better-than-expected numbers are the latest indication that Asia is powering the global recovery. China last week announced its economy grew 8.9 percent in the third quarter from a year earlier.
The continent’s biggest economy, Japan, grew at an annualized rate of 2.3 percent in the second quarter.
South Korea has recorded a string of positive data recently. Sales at major department stores increased last month at the fastest pace in eight months.
Manufacturers’ confidence remained at a two-year high for a second straight month this month, while major exporters Hyundai, Kia and Hynix Semiconductor have reported strong third-quarter performances.
The central bank said inventory build-up, which rose 2.9 percent quarter-on-quarter, also contributed to the high third-quarter figure.
Economists said growth would likely slow in the fourth quarter, with the waning impact of the government’s stimulus measures.
“Continued strength in exports will be the main driver for economic growth, while domestic demand will be weakened due to the withdrawal of fiscal stimulus,” said Oh Suk-tae, an economist at Standard Chartered. “Fiscal factors may lead to a slowdown in GDP growth in the fourth quarter.”
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