South Korea's economy expands at fastest rate in three quarters
Third-quarter growth of 2.6pc year on year the fastest annual rate in three quarters
South Korea's economy expanded 2.6 per cent year on year in the third quarter of this year, the fastest annual rate in three quarters, the Bank of Korea said on Friday, showing a recovery from the Middle Eastern respiratory syndrome crisis that gripped the country in the summer.
The result was better than expected. Asia's fourth-largest economy took a hit after a deadly outbreak of Mers in the country, prompting tourists to cancel trips and keeping local residents away from shopping malls and concert halls.
Consumer spending and construction drove growth, the data showed, overcoming the negative impact of a decline in exports, due partly to weaker demand from China.
Compared to the previous quarter, the economy gained 1.2 per cent, the first time in 18 months that growth exceeded 1 per cent on a quarterly basis.
It was also the fastest quarter-to-quarter growth rate in five years.
With consumption and exports slowing earlier this year, the central bank lowered its key policy rate to a record low of 1.5 per cent. The government also introduced a tax cut and added an additional public holiday in hopes that would boost spending.
"Consumer spending and the service sector that had contracted in the second quarter showed a recovery," said Jeon Seung-cheol, the director general of the Bank of Korea's economic statistics department.
"Private consumption improved thanks to the government's stimulus policies."
South Korean exporters, a key driver of growth, have been hurt by sluggish global demand, slowing economic growth in China as well as the weak Japanese currency that helped Japanese rivals.
Oil refinery companies, which also account for a significant portion in South Korea's exports, saw their bottom line eroded as the price of crude oil fell.
Earlier this month, the Bank of Korea trimmed its forecast for the country's economic growth this year to 2.7 per cent from 2.8 per cent, citing a weaker global economic outlook.