South Korea’s economy, which is the third largest in Asia, expanded by 1.8% in the first three months of the year on the back of a strong recovery in manufacturing, exports and spending.
Exports grew by 3.4% in the three month period after contracting 1.5%. Meanwhile, manufacturing grew 3.6% in the first quarter after shrinking 1.7% in the previous quarter.
Like many other economies in Asia, South Korea has recovered well from the global recession, helped by low interest rates and Government stimulus packages.
The International Monetary Fund recently said Asia would lead the way in the global recovery and this appears to ring true after it was revealed earlier this month that Singapore’s economy saw first quarter annualised growth of 32.1%, again driven manufacturing activity.
Meanwhile, according to the Bank of Korea, the economy will grow this year at its fastest rate in four years.
Oh Suk-tae at Standard Chartered First Bank Korea in Seoul said: “The recovery is pretty well established. Growth is clearly picking up again.”
However, many economists have expressed concern about the economy overheating and, as a result, pressure will mount on the country’s central bank to hike interest rates and loosen currency controls.
Interest rates current stand at the historic low of 2% and have been at this level since February 2009.