South Korean economy up 0.9 percent in first quarter

April 25, 2013 at 5:57 AM
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SEOUL, April 25 (UPI) -- South Korea's economy grew 0.9 percent in the first quarter from the previous quarter, the Bank of Korea said in its advance estimate Thursday.

The growth in the gross domestic product was better than the 0.3 percent growth recorded in the fourth quarter of last year, the central bank reported on its website.

However, the latest numbers could encourage the bank to freeze its key interest rate at 2.75 percent for the remainder of the year if the economy performs better in the second half, Yonhap News reported.

The first quarter growth, credited partly to higher exports, was the fastest growth rate in two years and beat the bank's projection of 0.8 percent.

There had been concerns about South Korea's export-dependent economy, the largest in Asia after China, Japan and India, as a weaker yen makes Japanese goods cheaper in markets where South Korean products also compete. First quarter exports, however, grew 3.2 percent from the earlier quarter.

South Korea's economy grew 2 percent in 2012, the slowest rate in three years, blamed on slower exports and consumer spending.

"The base effect cannot be ruled out. But the growth outlook remains intact for now, like the central bank's earlier projection that downside and upside risks are deemed as neutral," Kim Young-bae, the director general of the BOK's economic statistics division, said at a news conference.

"The growth data are underscoring the view that a rate cut is not likely to come this year," analyst Gong Dong-rak at Hanwha Investment and Securities Co. told Yonhap. "The yen's weakness would hurt Korea's exports but the government's fiscal spending could cushion bitter impact of a weaker yen."

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