South Korean economy grows 1.1 percent in 2Q

July 25, 2013 at 1:48 AM

SEOUL, July 25 (UPI) -- South Korea's economy grew by 1.1 percent in the second quarter from the previous quarter, the Bank of Korea said in its advanced estimates Thursday.

It was the fastest pace of growth in more than two years, up from the first on-quarter growth of 0.8 percent, Yonhap News reported.

On a year-on-year basis, the second quarter growth in the gross domestic product, credited to higher government spending, rose 2.3 percent, compared to year-on-year growth of 1.5 percent in the first quarter. The growth rate was expected to rise further in the second half of this year.

The latest numbers come after the central bank recently revised in growth outlook for this year to 2.8 percent from its earlier 2.6 percent forecast. The bank also had raised its estimate for next year to 4 percent from its earlier 3.8 percent.

"What's clear is that exports are performing well despite difficulties and the Korean economy is moving stronger than expected," said Jung Young-taek, a central bank director, Yonhap reported.

The government of newly elected President Park Geun-hye has introduced a number of stimulus measures to strengthen the economy. The measures include an additional budget of $15.5 billion.

"The second-quarter growth was mainly driven by fiscal spending and construction investment. It still remains to be seen whether domestic demand could maintain the recovery momentum," Lee Sang-jae, a senior economist at Hyundai Securities Co., told Yonhap.

He said the interest rate cut made in May is likely to remain unchanged this year.

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