By Kang Seung-woo
Staff reporter
The Korean economy is estimated to have grown 7.2 percent year-on-year in the first half of 2010, riding on brisk exports and recovering domestic demand.
The robust growth is expected to fuel expectations for the start of an exit plan with a key rate increase in August, if not this month.
"Following an 8.1 percent growth in the first quarter of the year, the local economy is predicted to gain 6.3 percent in the second quarter, making it 7.2 percent for the first six months," an official of the Ministry of Strategy and Finance said.
The official also attributed the high growth to the fact that the economy tanked in the corresponding period of last year.
Asia's fourth-largest economy was hit hard by the global financial crisis a year ago but has been on a fast recovery track since.
Korea posted a record trade surplus of $7.47 billion (9.17 trillion won) in June for the fifth straight month.
The current account surplus also hit a six-month high of $3.83 billion in May, remaining in the black for four months in a row.
Consumer prices rose 2.6 percent in June from a year ago, staying under the 3-percent level for five consecutive months, and fell 0.2 percentage points from May, the first monthly decline since November 2009.
According to industry experts, these numbers are putting pressure on the Bank of Korea (BOK) to raise its key rate either incrementally starting in July or by a bigger number in August.
The central bank has kept its key rate on hold at an all-time low of 2 percent for 16 straight months.
However, there have been increasing signs that a rate hike is in the offing, with top officials indicating a gradual end to easy credit. This followed advice by international institutions about the need for Korea to hike its rate.
Finance Minister Yoon Jeung-hyun recently said, "Korea could face a faster-than-expected price hike in the latter half of this year because the velocity of money circulation is rising and producer prices are also increasing in line with the economic recovery."
BOK Governor Kim Choong-soo said last week, "The BOK plans to manage monetary policy in such a way as to help support solid growth on the foundation of price stability. If the current accommodative policy stance is prolonged, it could bring about the risk of inflation and a hike in asset prices."