Published: Fri, April 28, 2017
World | By Tasha Manning

S Korean economy grows at fastest pace in a year

S Korean economy grows at fastest pace in a year

It remains in the zero-percent range for a sixth straight quarter, but marks a significant recovery from the zero.five percent growth in the fourth quarter.

"With the rise in USA market rates there may be some bond-related flows leaving the country but we expect the size of those flows to be limited enough to not lend a serious impact on bond markets", the BOK said in the report.

However, the economy still faces uncertainties from protectionist moves led by the United States as well as geopolitical risks stemming from North Korea, Finance Minister Yoo Il-ho said in opening remarks at a meeting in Seoul.

For this month, the Bank of Korea (BOK) kept its key rate at an all-time low of 1.25 percent for the 10th consecutive month after dropping the rate to its lowest level to bolster the lackluster South Korean economy.

The country's exports gained 1.9 percent in the first quarter compared with the previous quarter, after sliding 0.1 percent in the previous quarter. A drop in the number of Chinese visitors to Korea and the impact of this on tourism-related spending may put pressure on second-quarter growth. Private consumption grew 0.4 percent, accelerating from 0.2 percent previously. Facilities investment grew 4.3 percent on quarter and 14.3 percent on year amid the boom in the semiconductor industry due to surge in global demand and prices. It was the strongest growth that Asia's fourth-largest economy has experienced in nine months.

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"Drawing up an extra budget wouldn't make sense anymore", Lee said.

The trade ministry upgraded its 2017 export outlook to 6-7 percent, exceeding the earlier 2.9 percent estimate, citing stronger shipments of semiconductors, display panels and cosmetics.

The Bank of Korea's monetary policy rate now stands at a record low of 1.25 percent, while the Federal Reserve is widely seen to raise interest rates to a range of 1.25 percent to 1.50 percent by end-2017.

"We think the BOK's next move is up and, in line with consensus, we forecast it happening in the second half of 2018", ING said in report ahead of the GDP data.

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