Fri, Jan 24, 2014 - Page 15 News List

S Korean Q4 expansion meets estimates

THE YEAR AHEAD:The Bank of Korea has predicted a growth rate of 3.8 percent this year, after rising exports helped boost expansion in the final quarter of last year


A Bank of Korea official yesterday moves bundles of new bank notes headed for release in the basement of the bank. The banknotes are to be released to help stimulate the flow of money ahead of the Lunar New Year holidays next week.

Photo: AFP

South Korea’s economic growth matched analysts’ estimates in the fourth quarter, as the central bank kept the benchmark interest rate at the lowest level since 2010.

GDP gained 0.9 percent from the previous quarter, when the increase was 1.1 percent, the Bank of Korea said yesterday in a statement in Seoul.

That matched the median 0.9 percent estimate of 12 economists surveyed by Bloomberg News.

From a year earlier, growth was 3.9 percent.

The Bank of Korea is projecting 3.8 percent growth this year, the fastest pace since 2010, when Asia’s fourth-largest economy was rebounding from the global financial crisis.

At the same time, the government is monitoring the risks posed by weakness in the yen, which aids rival exporters in Japan, and the winding back of US stimulus measures.

“With signs of rising trade from stronger global demand, we believe Korea remains on track for a gradual export-led recovery,” HSBC Holdings PLC economist Ronald Man said in a report yesterday.

“Downside risks from a weak yen mean Korean officials will likely support growth by keeping policy accommodative for the time being,” he said.

The KOSPI closed down 1.2 percent and the won fell 0.6 percent against the US dollar to 1,073.79 in Seoul.

While the October-December last year expansion was the slowest in three quarters, it was faster than the economy registered in any quarter in 2012.

Exports contributed more to growth than domestic demand last year, but the gap narrowed from a year earlier, said Jung Yung-taek, director-general at the bank’s Economic Statistics Department.

Buoyed by rising exports, the private sector led the fourth-quarter expansion.

Consumer spending and investment in facilities also increased, while government spending stalled due to a drop in tax revenue, Jung told reporters in Seoul.

Bank of Korea Governor Kim Choong-soo, set to retire on March 31, held the benchmark rate at 2.5 percent on Jan. 9 after a surprise cut in May last year.

South Korean exporters need to penetrate into new markets amid concerns a weaker yen may hurt their competitiveness, South Korean Finance Minister Hyun Oh-seok said in a meeting in Seoul yesterday.

Hyundai Motor Co, the nation’s largest carmaker, yesterday reported fourth-quarter profit that missed analysts’ estimates after a stronger won eroded export earnings and domestic sales fell.

The IMF this week raised its forecast for global growth this year to 3.7 percent as expansions in the US and UK accelerate, and urged advanced economies to maintain monetary accommodation to strengthen the recovery.

South Korea’s recovery is bolstering employment while the property market is faring better than it did last year, Hyun said on Wednesday last week. The government will seek to balance between exports and domestic demand for sustainable growth, he said.

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