World Economic outlook - South Korea economic growth q1 2012, South Korea inflation rate march 2012, South Korea gdp growth march 2012, data exsport, interest rate : South Korea's economic growth accelerated at its fastest pace in a year in the January-March period on a quarterly basis, as solid industrial output, a pickup in private consumption and strong government spending offset softness in the construction and agricultural sectors.
Gross domestic product—the broad measure of all goods and services produced by the economy—rose a seasonally adjusted 0.9% in the first quarter from the fourth quarter of 2011, when the economy grew 0.3% from the earlier quarter, the Bank of Korea said Thursday. That is the strongest pace since the first quarter of last year, when the economy grew 1.3% on quarter.
he accelerated pace of growth was also partly due to a low base of comparison in the previous quarter, when the economy slowed sharply in the face of weaker global demand.
On a year-on-year basis, however, the economy expanded 2.8% in the first quarter, marking the weakest growth in two and a half years, which shows that the growth momentum in Asia's fourth-largest economy is cooling amid a global slowdown. In the first quarter of last year, GDP grew 4.2% from the year-earlier period.
The latest first-quarter performance was largely in line with market expectations for a 0.8% on-quarter rise and a 2.9% on-year expansion.
With the country expected to face continued headwinds from Europe, South Korea's finance ministry said early this year it would heavily front-load 2012's budget of around $239 billion in the first half, with about 32% of the total actually spent in the first quarter, to support growth.
"Government spending played a role, contributing a lot to the growth in the first quarter," Kim Young-bae, director-general of the Bank of Korea's economic statistics department, said at a media briefing after the data release. "Quarterly growth is returning to the long-term growth path, but it's too early to say the domestic economy is bottoming out."
Analysts expect growth to slow again in the current quarter, weighed by weak demand both domestically and abroad, although a contraction isn't likely. This will pressure the central bank to keep its policy rate steady for an extended period to underpin growth amid moderating inflation.
Early this month, the central bank kept the benchmark interest rate on hold at 3.25% for a 10th straight month.
The Bank of Korea last week trimmed its growth forecast for this year to 3.5% from an earlier projection of 3.7%.
Thursday's data showed exports, which account for about half of South Korea's GDP, rose 3.4% on-quarter in the first quarter, reversing a 2.3% decline in the fourth quarter.
Private spending, one of the main growth engines, gained 1%, swinging from a 0.4% fall in the preceding quarter.
Facility investment rose 10.8% after falling 4.3% in the previous quarter, while construction investment fell 0.7% after rising 0.1% in the fourth quarter.
As an export-led economy, South Korea tends to mirror the fortunes of the region, and its GDP numbers are often a harbinger of broader trends.
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