South Korea’s economy stronger than expected on exports recovery

People look at the first sunrise of the year at a park in Seoul, South Korea, Jan 1, 2024. REUTERS/Kim Hong-Ji/File photo

SEOUL  -South Korea’s economy grew in the fourth quarter of 2023 at the same pace as the previous quarter, official advance estimates showed on Thursday, beating market expectations mostly on a recovery in exports.

Gross domestic product (GDP) for the October-December quarter was 0.6 percent higher than the preceding three months on a seasonally adjusted basis, according to the Bank of Korea (BOK).

That compares with an expansion of 0.6 percent in the prior quarter and a median 0.5 percent increase tipped in a Reuters survey.

READ: South Korea Dec exports up for third month but at slower pace

A breakdown of the GDP figures showed exports expanded 2.6 percent, while imports rose 1 percent, bringing net growth contribution of 0.8 percentage points.

Private consumption climbed 0.2 percent and facility investment jumped 3 percent, but construction investment dropped 4.2 percent. Government spending was 0.4 percent higher.

On an annual basis, Asia’s fourth-largest economy in the fourth quarter grew 2.2 percent, after a gain of 1.4 percent in the third quarter and compared with a 2.1-percent rise expected by economists. That was the fastest since the third quarter of 2022.

Exports out of the trade-reliant economy grew for a third straight month in December, led by improving chip sales, although weak demand from China remained a drag.

READ: South Korea inflation eased for second month in December

The Bank of Korea hinted this month that it may pivot towards monetary easing along with its global peers, as the central bank held interest rates steady for an eighth meeting.

In 2023, South Korea’s economy grew 1.4 percent, a three-year low after gains of 2.6 percent in 2022 and 4.3 percent in 2021. The economy is expected to grow 2.1 percent in 2024, according to the BOK.