The South Korean economy expanded a revised 5 percent last year from a year earlier, up from an earlier 4.9 percent estimate, on brisk exports and solid growth of facility investments and private spending, the central bank said Friday.
The country's gross domestic product (GDP) grew 1.6 percent in the fourth quarter from three months earlier, more than an initial estimate of 1.5 percent, according to a preliminary report by the Bank of Korea (BOK). Compared to a year earlier, the fourth-quarter GDP rose 5.7 percent, up from an advance estimate of a 5.5 percent gain.
The central bank also revised upward the growth of Asia's fourth-largest economy for 2006 to 5.1 percent from the previous estimate of 5 percent.
GDP, the broadest measure of an economy's performance, is the total value of goods and services produced within the economy in a given period. The South Korean economy grew for the 19th quarter in a row.
"The South Korean economy maintained solid growth last year as exports and private spending picked up," said Choi Chun-sin, director of the BOK's economic statistics division. "Consumer spending is expected to grow further this year."
Last year, exports of goods, which account for nearly 40 percent of the economy, rose a revised 12 percent from a year earlier, slightly down from a 12.1 percent expansion estimate, on brisk overseas shipments of chips and industrial goods.
Facility investments grew 7.6 percent year-on-year in 2007, up from an earlier 7.5 percent estimate, while construction investments expanded 1.2 percent, less than an earlier estimate of a 1.6 percent gain.
Private spending, one of the main growth engines of the Korean economy, advanced 4.5 percent in 2007 from the previous year, compared with a 4.4 percent gain estimate as people increased spending on durable goods and other services.
"Despite woes over the slowing U.S. economy, the local economy maintained an upward trend last year on solid exports and a recovery of consumer spending. But Asia's fourth-largest economy is facing growing risks like soaring oil costs and a possible U.S. recession," said Lee Sang-jae, a senior economist at Hyundai
Securities Co.
Meanwhile, the country's gross domestic income, reflecting the actual purchasing power of the population, rose 3.9 percent on-year in 2007, well below last year's 5 percent economic growth, as terms of trade worsened amid soaring costs of raw materials.
The report came as the US$969.9 billion economy is gripped by fears of a U.S. recession and rising inflationary pressures driven by high oil costs. Local financial and stock markets were battered earlier this week on deepening credit woes after JPMorgan Chase & Co. said it would buy troubled Bear Stearns at a rock-bottom price of $2 per share.
Annual inflation rose 3.6 percent in February, breaching the BOK's target range of 2.5 to 3.5 percent for the third month in a row. The local currency has fallen 7.32 percent against the U.S. dollar so far this year.
The BOK forecast that the Korean economy will likely expand 4.7 percent this year due to solid exports and private spending amid global uncertainties. But President Lee Myung-bak, who took office last month, has vowed to raise the economic growth rate to around 6 percent this year by easing regulations and cutting taxes.