Seoul, April 25 (IANS) South Korea’s economic growth accelerated to a two-year high in the first quarter, breaching market estimates, as brisk exports offset a reduction in private consumption, central bank data showed Thursday.
Real gross domestic product (GDP), the broadest measure of economic performance, rose 0.9 percent in the first quarter from three months earlier after gaining 0.3 percent in the prior quarter, according to the Bank of Korea (BOK).
The reading was the highest since 1.3 percent tallied in the first quarter of 2011. It surpassed the BOK’s earlier forecast of 0.8 percent, topping the market estimates of 0.7 percent, reported Xinhua.
Exports of goods and services increased 3.2 percent in the first quarter from three months ago after falling 1.1 percent in the previous quarter.
The export growth came amid growing concerns that the devaluation of the Japanese yen will hurt South Korean exporters, which are fiercely competing with Japanese rivals.
The South Korean won rose 14.4 percent against the Japanese yen in the first quarter, the highest appreciation since the 14.5 percent gain in the second quarter of 2009.
Private consumption reduced 0.3 percent in the first quarter after growing 0.8 percent in the previous quarter. The reduction was attributed to the high base effect of the fourth quarter of 2012.
“During the fourth quarter of last year, unusually cold weather boosted consumption of heating fuel, electricity and winter clothes. Car sales increased ahead of the end of temporary tax cuts. The base effect stemming from those factors led to the reduction in consumption,” Kim Young Bae, director general of BOK’ s economic statistics department, told reporters.
The slower private consumption was relieved by government expenditure that rose 1.3 percent in the first quarter after declining 0.6 percent in the previous quarter. The government planned to frontload its 2013 budget in the first half to boost the sluggish economy.
The Ministry of Strategy and Finance earmarked 17.3 trillion won ($15 billion) in supplementary budget in 2013, the largest since 2009 when the global financial crisis peaked. The ministry slashed its growth outlook for 2013 to 2.3 percent from 3 percent.