S. Korean economy grows 2.6 pct in Q2

SEOUL, Sept. 3 (Yonhap) -- The South Korean economy grew at the fastest clip in more than five years in the second quarter, bolstered by upbeat exports and growing manufacturing activities, the central bank said Thursday.

The country's gross domestic product (GDP), the broadest measure of economic
performance, expanded 2.6 percent in the April-June period from three months
earlier, the Bank of Korea (BOK) said, revising up from a 2.3 percent previous
estimate.
The second-quarter growth marks the steepest expansion since the same 2.6 percent
gain registered for the last three months in 2003, the central bank data showed.
It is also a stark comparison with a 0.1 percent increase in the first quarter
this year.
Compared with a year earlier, the economy shrank 2.2 percent, an improvement from
an advance estimate of a 2.5 percent contraction.
"The second quarter growth came as tech and auto firms boosted production with
increased outbound shipments by IT companies," the central bank said in a
statement.
The government's massive fiscal spending and resilient private consumption were
also responsible, according to the BOK.
The government and the BOK have been scrambling to bolster the slumping economy
by implementing large scale fiscal spending and aggressively cutting the key
interest rate. In April, the parliament approved a 28.4 trillion won (US$22.7
billion) extra budget aimed at generating jobs and boosting domestic demand.
The sharp rebound in the second quarter is underpinning optimism that the Korean
economy has put behind its back the worst downturn in more than a decade. Asia's
fourth-largest economy averted a technical recession in the first quarter after
tumbling 5.1 percent the previous quarter
Exports of goods, which power nearly 60 percent of the economic growth, spiked
14.7 percent in the second quarter from three month earlier, sharply rebounding
from a 3.4 percent decline in the first quarter. From a year earlier, the figure
was still 4.2 percent lower.
Private spending, one of the main growth engines of the South Korean economy,
expanded 3.6 percent on-quarter.
Facility investment also posted a sharp revival, advancing 10.1 percent, compared
with a 11.2 percent slump the previous quarter.
Meanwhile, the country's gross national income, a measure reflecting the actual
purchasing power of the population, surged 5.6 percent in the April-June period
from three months earlier, snapping three months of a downtrend. The second
quarter expansion marks the steepest increase since the first quarter of 1988.
The report comes amid rising cautious optimism that Asia's fourth-largest economy
may be bottoming out. Year-on-year industrial output grew for the first time in
10 months in July while consumer sentiment hit a seven-month in August on hopes
of an economic recovery.
In August, the BOK froze its key interest rate at an all-time low of 2 percent
for a sixth straight month after conducting rate cuts totaling 3.25 percentage
points between October and February.
The BOK predicted that the Korean economy will shrink 1.6 percent in July,
upgrading from a previous estimate of a 2.4 percent decline with the Ministry of
Strategy and Finance also raising its outlook to minus 1.5 percent from a 2
percent contraction.
pbr@yna.co.kr
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