South Korea’s economy expanded at its fastest pace in nearly two years during the third quarter as construction and capital expenditure offset weak growth in exports.
The Bank of Korea said yesterday that the economy grew 3.3 percent in the July-September period from a year earlier, the fastest rate since the fourth quarter of 2011.
From the previous quarter, Asia’s fourth-largest economy expanded 1.1 percent, the same rate as the previous three months. The figures underlined that South Korea’s economy is on track for a modest recovery. Quarterly growth had been less than 1 percent for eight quarters until picking up in the April-June quarter this year.
The South Korean central bank said export growth was weaker in the third quarter, but construction investment led growth.
Capital expenditures turned higher in the July-September period after shrinking for more than a year thanks to increased spending on cars and transportation equipment.
The bank said the economic recovery is uneven between the country’s top companies, such as Samsung Electronics Co and Hyundai Motor Co, and small firms.
“Big exporters and big-name manufacturers are doing significantly well, but small firms are not,” said Jung Young-taek, director-general of the Bank of Korea’s economic statistics division. “Growth pace is solid but there is a growth gap between different sectors.”
The bank forecast South Korea’s economy will likely expand 2.8 percent this year.
Meanwhile, the Australian government announced yesterday that it has secured a free trade agreement with South Korea after four years of negotiations.
South Korea is Australia’s third-largest export market and Australian Prime Minister Tony Abbott said the deal would see tariffs of up to 300 percent gradually eliminated on key Australian agricultural exports such as beef, wheat, sugar and dairy.
Tariffs will also be removed from resources, energy and manufactured goods, while the deal will open the door to new market opportunities for Australian services in education and telecommunications.
Bilateral trade between Australia and South Korea reached A$32 billion (US$29 billion) last year and Abbott said “this agreement will help take that to a new level.”
Independent modeling shows the agreement would be worth A$5 billion between 2015 and 2030 and boost the Australian economy by about A$650 million annually after 15 years, he added.