South Korean economy grows 2.3 per cent in second quarter

Jul 24, 2009, 4:02 GMT

   Seoul - South Korea's economy recorded its fastest tempo of growth in five years in the second quarter, expanding 2.3 per cent from the previous quarter, thanks to increased government spending and a rise in exports, the central bank said Friday.

   The rise in the gross domestic product (GDP) was well above the 0.1-per-cent growth from the first quarter when Asia's fourth-largest economy came within a hair's breath of recession.

   GDP was given gas from jumps in exports, production and consumer spending from April to June.

   In the Bank of Korea's preliminary statistics for the quarter, it said exports rose from the first three months of the year by 14.7 per cent while production was up 8.2 per cent.

   The purchase of big-ticket items, such as cars, helped consumer spending rise 3.3 per cent, it said. Car purchases were encouraged by a reduction in taxes.

   In comparison with the second quarter of 2008, however, South Korea's GDP fell 2.5 per cent. The figure was less than the 4.2-per-cent year-on-year contraction seen in the quarter before.

   'On the expenditure side, construction investment and government expenditure showed sustained growth, and the scale of the decline in both private consumption and exports of goods was reduced considerably,' the Bank of Korea said.

   The government approved a record 28.9-trillion-won (23.15-billion-dollar) supplementary budget in March aimed at kick-starting the economy. It included spending on infrastructure projects and job-creation initiatives.