South Korea’s Economy Grows at Fastest Pace in Almost Six Years

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So far it is just a rebound but part of a pattern of generally better than expected data and supports the notion that removing fiscal drag does restore domestic demand.

South Korea’s Economy Grows at Fastest Pace in Almost Six Years

By Seyoon Kim

July 24 (Bloomberg) — South Korea’s economy expanded at
the fastest pace in almost six years last quarter as exports and
household spending jumped.

Gross domestic product rose 2.3 percent from the first
quarter, when the nation skirted a recession by growing 0.1
percent, the Bank of Korea said today in Seoul. That was better
than the 2.2 percent growth estimated by economists.

Samsung Electronics Co. today joined exporters Hyundai
Motor Co. and LG Electronics Inc. in reporting profit surged
last quarter, helped by a weaker currency and demand fed by $2.2
trillion in stimulus worldwide. Consumer spending climbed 3.3
percent from the first quarter, the most in seven years, fueled
by interest rates at a record-low 2 percent.

“Exports have improved more than expected while domestic
demand got a big boost from the fiscal and monetary policy
steps,” said Lee Sang Jae, economist at Hyundai Securities Co.
in Seoul. “I expect Korea to remain on a recovery path” even
after the boost from the stimulus measures wanes, he said.

The Kospi stock index rose 0.4 percent today in Seoul,
taking the year’s gains to 34 percent after a 41 percent drop in
2008. The won rose 0.2 percent to 1,249.55 per dollar.

Last quarter’s expansion was the fastest since the economy
grew 2.6 percent in the last three months of 2003. Exports
gained 14.7 percent, also the biggest advance in almost six
years. From a year earlier, GDP shrank 2.5 percent.