Korea’s GDP in the July-September period grew 1.2 percent compared to the first three months of the year, according to the Bank of Korea (BOK) on Friday.
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The seasonally adjusted reading, up sharply from a 0.3 percent gain in the second quarter, compared with a median 1.0 percent rise tipped in a Reuters survey. It was the fastest on-quarter growth since the second quarter of 2010, and up from just 0.3 per cent in the April-June period.
Earlier this month, Bank of Korea trimmed its forecast for South Korea’s economy this year to 2.7 percent from 2.8 percent, citing a weaker global economic outlook.
A rebound in consumer spending following the end of a national health scare over an outbreak of the MERS virus saw South Korea’s economic growth accelerate to a five-year high in the third quarter.
Jeon attributed the rebound in consumer spending to the government measures to reinvigorate the economy, like a consumption tax cut and a fiscal stimulus package worth billions of US dollars including an extra budget plan.
Policy makers including Finance Minister Choi Kyung Hwan and Bank of Korea (BoK) governor Lee Ju Yeol have highlighted positive signs in the economy, while cautioning that risks remain from weakness and uncertainties in overseas markets. “Private consumption recovered from contraction caused by the MERS”, Jeon Seung-Cheol, director general of the BOK’s economic statistics department, told a press conference.
The quarterly growth rate was the fastest since the March quarter 2011, and left the annual rate of growth at levels not seen since the December quarter 2014.
With consumption and exports slowing earlier this year, the BOK lowered its key policy rate to a record low of 1.5 percent.
Yet the central bank’s data showed that a sharp recovery in domestic demand more than offset the drop in exports.
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Construction investment rose 4.5 per cent, while investment on facilities which include machinery and equipment grew 2 per cent and investment in intellectual property products increased 0.2 per cent.
