(아주경제 엄윤선 기자) South Korea’s economic growth escalated more than predicted in the three months through March as the global recovery increased demand for the nation’s electronics products and consumer spending hiked.
Gross domestic product increased 1.8 percent in the first quarter from the previous three months, when it rose 0.2 percent, the central bank said in Seoul today. That was more than the median forecast of 1.5 percent from a Bloomberg News survey of 12 economists. From last year, GDP has gained 7.8 percent.
Exports surged this year, driving stocks and the won higher as Hyundai Motor Co. increased sales in the U.S. and China and Samsung Electronics Co. posted a seven-fold growth in profit. The central bank forecasts the economy will expand at the fastest pace since 2006 and Moody’s Investors Service raised the nation’s credit ratings one step to A1 on April 14.
“The economy has attained its sppedy recovery pace and the second quarter will also be optimistic,” said June Park, an economist at Woori Investment & Securities Co. in Seoul.
“Upbeat growth may add pressure for an early rate increase, but the central bank will likely remain reserved until the second half as domestic demand is not strong enough.”
The central bank has held the benchmark interest rate at record-low 2 percent for 14 straight months after slashing it by 3.25 percentage points between October 2008 and February 2009 to protect the economy from the global economic slump.
Even after the revised economic outlook and ratings upgrade, Bank of Korea Governor Kim Choong Soo has been reluctant to adopt tightening monetary policy in the face of a government that has publicly opposed climbing borrowing costs.
The government says it’s “too early” to implement an exit strategy to policy processes taken during the global financial crisis. It sent a vice finance minister to attend the Bank of Korea’s monthly meeting since January, breaking a practice of excluding political representatives over 10 years.
President Lee Myung Bak’s administration boosted this year’s budget by 3 percent to 292.8 trillion won ($256 billion) and has said it will speed up distribution of funds as it seeks to continue the recovery.
Investors assured of the robust economy have driven the benchmark Kospi stock index up 4.1 percent this year and the won 4.8 percent higher against the dollar over the same period.
Today’s report showed that goods exports lifted 3.4 percent in the first quarter compared with the previous three months, when they dropped 1.5 percent. Private consumption rose 0.6 percent from the fourth quarter and government spending jumped 5.7 percent.
“The economy is doing better than predicted,” Song Jae Hyuk, an economist at SK Securities in Seoul, said before the release. “Exports are solid on the global economic recovery and private consumption is picking up on low borrowing costs and improved job market conditions.”
The government forecasts overseas shipments will go up 13 percent this year to $410 billion. Growth in China, South Korea’s No.1 export market, advanced to the fastest pace in almost three years in the first quarter, with GDP stretching 11.9 percent from a year earlier.
Samsung Electronics Co., Asia’s largest semiconductors, flat screens and mobile phones maker reported its first-quarter profit expanding sevenfold from last year on demand for personal computers and televisions.
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