SKorea's economy grows at fastest pace in 7 years
South Korea's economy grew at its fastest pace in over seven years in the third quarter amid strength in manufacturing and capital spending, the central bank said Monday, as Asian countries lead the global recovery.
Gross domestic product grew 2.9 percent in the three months ended Sept. 30 compared with the previous quarter when it expanded 2.6 percent, the Bank of Korea announced. The figure is preliminary and subject to revision.
That marked the strongest growth since an expansion of 3.8 percent in the first quarter of 2002, according to bank data.
South Korea has been recovering from its worst downturn since the 1997-98 Asian financial crisis as a weaker currency and government stimulus programs overseas boost exports. Record-low interest rates and government spending at home have also helped stimulate Asia's fourth-largest economy.
The unemployment rate fell in September to a nine-month low of 3.4 percent, consumer and business sentiment have risen and the current account - South Korea's broadest measure of trade - is firmly back in surplus after a deficit last year for the first time since 1997. Hyundai Motor Co. and Kia Motors Corp., both major exporters, reported record quarterly net profit in the third quarter as sales rose.
The country's latest GDP figure marks the third straight three-month period that the economy has grown. It eked out a 0.1 percent expansion in the first quarter after having contracted 5.1 percent in the final three months of 2008.
The central bank also said Monday that South Korea's economy grew in the third quarter compared with the same period last year, expanding 0.6 percent. That snapped three straight quarters of year-on-year contraction.
Manufacturing expanded 8.7 percent in the third quarter, while capital spending grew 8.9 percent.
The latest growth figures also add to evidence that Asian countries are leading a recovery in the world economy after it slumped severely in the aftermath of the global financial meltdown last year.
China's economy, the world's third largest, grew 8.9 percent in the third quarter from a year earlier, accelerating from an expansion of 7.9 percent in the second. Singapore's economy grew an annualized 14.9 percent in the third quarter, expanding for a second straight three-month period.
Japan, the world's second-largest economy, grew at an annual pace of 2.3 percent in the second quarter, following a yearlong contraction. Japan has yet to release figures for the third quarter.
Asia's performance contrasts with that of other major economies, some of which remain mired in recession. The German and French economies each grew a modest 0.3 percent in the second quarter. They have yet to release results for the third.
Britain's economy, however, shrank 0.4 percent in the third quarter, confounding expectations of growth.
The United States shrank 0.7 percent in the second quarter, though is expected to have expanded in the third after four straight quarters of decline.
Given South Korea's recovery, economists have been closely watching the Bank of Korea for signs it may begin to raise its key interest rate, which has been kept at a record low 2 percent for an eight months. At it most recent meeting this month, the bank largely doused speculation a rise could come this year. Economists expect it to lift borrowing costs, gradually beginning early next year.
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