Stimulus fuels South Korea recovery

Growth fastest in more than seven years, thanks to government spending and rate cuts.

    Gross domestic product rose 2.9 per cent in the third quarter from three months earlier [EPA]

    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."

    "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.

    special report
    We look at the implications of the world economic crisis

    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.

    SOURCE: Agencies


    YOU MIGHT ALSO LIKE

    How different voting systems work around the world

    How different voting systems work around the world

    Nearly two billion voters in 52 countries around the world will head to the polls this year to elect their leaders.

    How Moscow lost Riyadh in 1938

    How Moscow lost Riyadh in 1938

    Russian-Saudi relations could be very different today, if Stalin hadn't killed the Soviet ambassador to Saudi Arabia.

    The peace games: Dreaming big for South Sudan's youth

    The peace games: Dreaming big for South Sudan's youth

    A relatively new independence and fresh waves of conflict inspire a South Sudanese refugee to build antiwar video games.