(2nd LD) S. Korean economy grows by revised 3.2 pct in Q3

(ATTN: UPDATES with more detail and remarks by BOK official and economist in para 5)
By Kim Soo-yeon
SEOUL, Dec. 4 (Yonhap) -- The South Korean economy grew 3.2 percent in the third
quarter from three months earlier, the fastest growth in over seven years, thanks
to improving domestic demand and brisk exports, the central bank said Friday.

The country's gross domestic product (GDP), the broadest measure of economic
performance, was revised up from an earlier prediction of a 2.9 percent
on-quarter expansion for the July-September period, according to the Bank of
Korea (BOK). It marked the fastest quarterly growth since a 3.8 percent advance
in the first quarter of 2002.
Compared with a year earlier, Asia's fourth-largest economy expanded 0.9 percent
last quarter, up from a previous estimate of 0.6 percent and marking the first
yearly expansion in a year, it added.
"The stronger numbers came as companies swiftly adjusted inventories and exports
remained robust, boosting manufacturers' growth," Jung Yung-taek, head of the
BOK's national income statistics team, told reporters. "Last quarter, the private
sector led the overall economic growth."
A set of economic data are underpinning optimism that the Korean economy is fast
emerging from its worst downturn in more than a decade on the back of improving
domestic demand and robust exports.
Exports of goods, which account for about 50 percent of the local economy, grew
5.2 percent on-quarter in the third quarter, better than an earlier projection of
5.1 percent. Private spending, one of the main growth engines of the Korean
economy, expanded 1.5 percent, compared with a previous estimate of a 1.4 percent
gain.
The manufacturing sector grew 9.8 percent on-quarter in the third quarter, up
from an initial estimate of 8.7 percent, amid robust production of autos and
semiconductors.
Meanwhile, the country's gross national income, a barometer of the actual
purchasing power of the population, grew 0.4 percent on-quarter in the
July-September period, compared with 5.6 percent in the second quarter, as the
terms of trade deteriorated amid rising raw material costs, it added.
Despite the batch of upbeat economic readings, economists said the central bank
will likely put the key interest rate on hold for the time being, given patches
of lingering weakness for the global economy.
Sluggish job markets and the waning effects of massive stimulus packages are
prompting policymakers to strike a cautious note over the pace of recovery.
Analysts said recent woes over Dubai's debt crisis, albeit somewhat eased, added
fuel to economic uncertainty.
"Despite solid growth figures, economic uncertainty persists as Dubai's problems
indicate that global financial markets are not yet reassured," said Jun Min-kyu,
an economist at Korea Investment & Securities, adding that the BOK is likely to
hike the rate in the first quarter.
But debate has been mounting over when and how to wind back expansionary fiscal
and monetary policies in order to minimize side effects they could have on the
economy if kept in place for a protracted period.
On Nov. 12, BOK Gov. Lee Seong-tae hinted that the central bank will not be in a
hurry to raise borrowing costs due to the still-murky outlook for the global
economy.
The BOK slashed the rate by a total of 3.25 percentage points to a record low of
2 percent between October 2008 and February in an effort to boost the sagging
economy.
sooyeon@yna.co.kr
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