By Lee Hyo-sik
Staff Reporter
The economy has continued to expand at a solid pace on strong exports and recovering domestic consumption, pointing to growing signs that the economy is getting stronger in the second half, the Ministry of Finance and Economy said in a report on Thursday.
It projected that the world's 13th largest economy will grow 4.6 percent this year unless external conditions worsen dramatically.
Earlier this week, the Bank of Korea (BOK) said the gross domestic product (GDP), the total output of goods and services produced in the country, expanded a revised 1.8 percent during the April-June period from a quarter ago, citing strong exports and the rapid growth of the financial industry. The second-quarter growth figure is the highest since the fourth quarter of 2003, when the GDP rose 2.7 percent. Year-on-year, the GDP expanded 5 percent.
Also, according to the National Statistical Office (NSO), industrial output expanded at the fastest pace this year at 14.3 percent in July from a year earlier. The services industry expanded 9.8 percent in July from a year ago, the highest growth since October 2002 when the sector recorded an 11 percent gain.
The statistical office also said consumers remained optimistic about the economy for a fifth straight month in August, hinting at a possible rise in domestic spending. An index measuring consumer confidence in economic and living conditions for the next six months stood at 103 last month, up from 102.6 in July.
``Industrial production in August will likely continue to post a solid expansion on strong exports and reviving domestic demand. But the pace of growth may slow,'' the ministry said in a report.
It expected exports to slow down this month on fewer working days because of Chuseok holidays, adding overseas shipments will recover in October.
``Judging by continued upbeat exports and domestic economic indices, the international financial market instability as a result of U.S. subprime mortgage defaults has not spread to a broader economy here,'' it said. But there are still downside risks to the economy, including the U.S. economic slowdown amid the sluggish housing market and rising international oil prices.''
The government will closely monitor the global market conditions and if necessary, will take appropriate measures to counter potential negative effects on the economy, it said.