South Korea’s economy gained some speed in the fourth quarter as increased spending by the government helped offset slowing exports.
GDP expanded 1 percent from the previous quarter, versus economists’ median estimate of 0.6 percent, to reach 3.1 percent for the quarter, led by government spending and construction and infrastructure investment.
The median economists’ estimate had been 2.7 percent.
However, the growth figure for the year was 2.7 percent, down 0.4 percentage points from 2017, the weakest since 2012, when it was 2.3 percent, the Bank of Korea said.
Slowing export growth toward the end of last year has sparked fears of an economic slowdown in South Korea.
Economists worry that the government might not be able to keep propping up GDP.
“The government made a good effort to boost growth in the last quarter, but I don’t think this can last for long,” Hyundai Research Institute economist Joo Won said. “Conditions will probably worsen this year because of weakening exports and that will lead to a slowdown in investment in the end, especially semiconductors.”
Weakening semiconductor exports, the down-shift in Chinese growth and the US-China trade dispute are significant risks.
Bank of Korea Governor Lee Ju-yeol has expressed concern over the global slowdown and trade tensions, but record household debt and fears of financial imbalances limit his options for responding.
Government spending increased 3.1 percent, the highest since the first quarter of 2010, when it rose 3.4 percent.
Export volumes in the GDP figures fell 2.2 percent in the fourth quarter from the previous quarter, when they gained 3.9 percent.
Import volumes rose 0.6 percent, following a 0.7 percent contraction in the previous quarter.
Facilities investment rose 3.8 percent after dropping 4.4 percent in the third quarter, and construction investment rose 1.2 percent from the earlier quarter, when it contracted 6.7 percent.
Private spending rose 1 percent in the fourth quarter.
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