South Korea says economy grew at fastest rate in nearly 3 years

SEOUL, South Korea – South Korea recorded its fastest growth since the first quarter of 2011, its central bank said Thursday, showing a recovery in Asia’s fourth-largest economy is on track.

The Bank of Korea said preliminary data showed that the economy expanded by 3.9 per cent in the final quarter of 2013 over a year earlier, accelerating from the third quarter’s 3.3 per cent. The growth was thanks to an increase in capital expenditure and exports.

From the previous quarter, the country’s gross domestic product increased 0.9 per cent, slowing from the previous two quarters when it expanded 1.1 per cent.

For all of 2013, the economy expanded 2.8 per cent, matching the bank’s forecast. Capital expenditure declined for a second straight year but investment in the construction industry turned sharply higher and private consumption showed a steady gain. Export growth slightly accelerated from the previous year.

South Korea is on track to recover from 2012 when economic growth slowed to a three-year low. In 2013, the government introduced stimulus measures to boost the real estate market and an overall economic recovery.

The Bank of Korea said last week that the recovery will continue to pick up this year, predicting 3.7 per cent expansion for the year.

There are still concerns that growth in South Korea is too reliant on big companies and is largely driven by the government spending rather than private industry.

Weak domestic demand and capital spending from companies are among the challenges. South Korea’s government has made boosting private businesses and domestic consumption as its priority for this year.