Stimulus fuels South Korea recovery
Growth fastest in more than seven years, thanks to government spending and rate cuts.
Aggressive spending
On a year-on-year basis, Monday’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.”
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“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” Oh Suk-Tae, economist |
Amid a global recession sparked by the financial crisis, the economy had shurnk 5.1 per cent quarter-on-quarter in the last three months of 2008 before expanding 0.1 per cent in January-March.
Its recovery has been fuelled by aggressive government fiscal spending and rate cuts.
Exports have profited from the local currency’s sharp drop against the dollar until recently, and overseas stimulus programmes.
Exports rose 5.1 per cent quarter-on-quarter in the three months ending September 30, after jumping 14.7 per cent in the second quarter.
Private spending increased 1.4 per cent compared with a 3.6 per cent gain in the preceding quarter.
Capital investment climbed 8.9 per cent after rising 10.1 per cent in the second quarter, while construction investment declined 2.1 per cent compared with a 1.7 per cent expansion three months earlier.
Asian growth
South Korea’s better than expected numbers are the latest indication that Asia is powering the global recovery.
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China last week announced its economy grew 8.9 per cent in the third quarter from a year earlier.
The continent’s largest economy Japan grew at an annualised rate of 2.3 per cent in the second quarter.
South Korea has recorded a string of positive data recently.
Sales at major department stores increased in September at the fastest pace in eight months.
Manufacturers’ confidence remained at a two-year high for a second straight month in October, 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.