South Korea’s economy stronger than expected on exports recovery

SOUTH Korea’s economy grew in the fourth quarter of 2023 at the same pace as the previous quarter, official advance estimates showed on Thursday (Jan 25), beating market expectations mostly on a recovery in exports.

Gross domestic product for the October to December quarter was 0.6 per cent higher than the preceding three months on a seasonally adjusted basis, according to the Bank of Korea (BOK).

That compares with an expansion of 0.6 per cent in the prior quarter and a median 0.5 per cent increase tipped in a Reuters survey.

A breakdown of the GDP figures showed exports expanded 2.6 per cent, while imports rose 1.0 per cent, bringing net growth contribution of 0.8 percentage point.

Private consumption climbed 0.2 per cent and facility investment jumped 3.0 per cent, but construction investment dropped 4.2 per cent. Government spending was 0.4 per cent higher.

On an annual basis, Asia’s fourth-largest economy in the fourth quarter grew 2.2 per cent, after a gain of 1.4 per cent in the third quarter and compared with a 2.1 per cent rise expected by economists. That was the fastest since the third quarter of 2022.

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Exports out of the trade-reliant economy grew for a third straight month in December, led by improving chip sales, although weak demand from China remained a drag.

The Bank of Korea hinted this month that it may pivot towards monetary easing along with its global peers, as the central bank held interest rates steady for an eighth meeting.

In 2023, South Korea’s economy grew 1.4 per cent, a three-year low after gains of 2.6 per cent in 2022 and 4.3 per cent in 2021. The economy is expected to grow 2.1 per cent in 2024, according to the BOK. REUTERS