South Korea's economy grows at fastest pace in 3 quarters

Cornelia Mascio
Aprile 27, 2017

South Korea's exports growth will be faster than expected earlier this year on the back of a global economic recovery and rising demand for chips, the country's trade minister said Thursday.

Gross domestic product grew a seasonally adjusted 0.9 per cent in the first quarter, the Bank of Korea said on Thursday (April 27), accelerating from a 0.5 per cent quarterly expansion in the final three months of previous year.

The overseas shipments gained 1.9 per cent in the first quarter, after falling 0.1 per cent in the previous quarter.

Construction investment growth leapt 5.3 per cent from three months earlier, as "apartment projects that boomed from a year earlier are still supporting economic growth", a finance ministry official said after the data was published.

The growth pace in the January-March quarter followed a 0.5 percent expansion in the final quarter of 2016, and outperforms a median 0.7 percent increase forecast in a Reuters poll. The preliminary data for the first quarter indicated that the real GDP grew 0.9 percent on a sequential basis, as compared with the 0.5 percent growth seen in the prior quarter. The figure is slightly up from 0.2 percent expansion in the fourth quarter, but the growth was mainly supported by Koreans' overseas consumption.

From a year earlier, the real GDP advanced 2.7 per cent in the March quarter. This is more than the forecast of 0.7 percent growth. Korea's exports have been on an upward trend since November, ending almost two years of decline thanks to a general pick up in the global economy. Private consumption was up 2 percent, whereas government consumption rose 2.7 percent.

"The latest GDP growth in Korea is not based on domestic demand, which will bring down the nation's competitiveness in the long term", Lee told The Korea Herald. Imports also rose 4.3 percent on quarter and 9.4 percent on year.

The Korean economy expanded 2.8 percent in 2016, according to the BOK.

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