S. Korea's 3Q growth revised higher to 3.2 percent

AP News
Posted: Dec 04, 2009 2:20 AM

South Korea's economy expanded 3.2 percent in the third quarter, the central bank said Friday, a better performance than initially estimated amid stronger growth in manufacturing, exports and services.

The revised figure for the three months ended Sept. 30 compared with the previous quarter remains the country's strongest growth in more than seven years since an expansion of 3.8 percent in the first quarter of 2002, according to Bank of Korea figures.

The bank said in October that Asia's fourth-largest economy had grown 2.9 percent. The latest estimate is based on more complete data.

The 3.2 percent figure equates to annualized growth of 13.6 percent, according Lim Ji-won, economist at JP Morgan in Seoul. The BOK does not provide an annualized number.

The stronger quarterly growth adds to mounting evidence that South Korea is recovering from the global slowdown. GDP has expanded three straight quarters after contracting 5.1 percent in the final three months of last year amid the shock of the worldwide financial meltdown. Export markets for South Korean products had withered as consumers around the world slashed spending.

Manufacturing expanded 9.8 percent in the third quarter, compared with the initial estimate of 8.7 percent, the central bank said. Growth figures for capital spending, private consumption, exports and services were also revised upward.

The Bank of Korea also said that the economy grew 0.9 percent in the third quarter compared with the same period last year. That was higher than the initial estimate of a 0.6 percent expansion. Beginning in the fourth quarter last year the economy had contracted for three straight quarters compared with the year before.

Exports in November posted their first year-on-year gain in 13 months, increasing 18.8 percent to $34.3 billion. The country's foreign currency reserves hit a record high of $270.89 billion in November. And the jobless rate fell to 3.2 percent in October, the lowest level in 11 months.

The Bank of Korea steadily slashed its benchmark interest rate after the onset of the global financial crisis to help boost the economy. Attention is now focused on when Gov. Lee Seong-tae and other bank policy makers will decide to begin raising the rate from a record low 2 percent. The next rate-setting policy meeting is scheduled for Dec. 10.

Economists have broadly expected the bank to begin gradually lifting the rate in the first quarter of 2010.

Pressure from the government against a perceived early exit from the low rate strategy and the approaching conclusion of Lee's four-year term as central bank governor at the end of March have injected some uncertainty into that scenario, said JP Morgan's Lim.