South Korea Q2 2007 GDP

From Bloomberg today:

South Korea's Economy Expands 1.8 Percent on Exports


South Korea's economy expanded at the fastest pace in almost four years in the second quarter, helped by rising exports, according to revised figures released today.

The economy grew 1.8 percent, the quickest since the fourth quarter of 2003 and more than the initial estimate of 1.7 percent, the Bank of Korea said in Seoul. From a year ago, the expansion was 5 percent, up from July's estimate of 4.9 percent.

Rising overseas demand helped the country sustain the longest stretch of growth in a decade. Overseas shipments account for two-fifths of gross domestic product and orders from South Korea's biggest market, China, have more than compensated for a slowdown in the U.S.

``Growth is likely to remain resilient amid healthy exports and a pickup in domestic demand,'' Go You Sun, an economist at Daewoo Securities Co. in Seoul, said before the report was released. ``The economy will perform well through next year.''

Exports grew at the fastest pace in six months in July, a previous report showed. China's economy expanded 11.9 percent in the second quarter, the fastest pace in more than 12 years.

South Korea shows few signs of being affected by the fallout from the U.S. housing recession, Vice Finance Minister Kim Seok Dong said Aug. 30. Moody's Investors Service last month raised the nation's debt rating to A2, the sixth-highest investment grade.

Stocks rose and the currency fell. The benchmark Kospi index of stocks gained 0.3 percent to 1878.56 at 9:34 a.m. in Seoul. The won fell 0.02 percent to 938.45 against the dollar.

Exports, Consumption

Exports of goods rose 5.2 percent in the second quarter, matching the earlier estimate, today's report showed. Private consumption gained 0.8 percent, also unchanged from the earlier estimate. Business investment climbed 3.4 percent. Construction investment dropped 1.3 percent, less than the 1.4 percent decline earlier estimated.

The services industry expanded 1.3 percent in the second quarter from the first, compared with the previous estimate of 1.1 percent. A 22 percent gain in the country's stock index in the first six months of this year helped boost demand for financial products, today's report showed. The financial and insurance sector expanded 5.1 percent from the first quarter, up from the previous estimate of 3.6 percent.

Hyundai Motor Co., the country's largest automaker, said local sales jumped 88 percent and exports climbed 53 percent in July. Samsung Heavy Industries Co., the world's second-largest shipbuilder, has received $14.5 billion in orders this year, 97 percent of its annual goal of a record $15 billion.

2007 Growth Forecast

The central bank's 2007 GDP growth forecast of 4.5 percent remains ``valid,'' Ahn Kil Hyo, a central bank official said at a press briefing in Seoul.

Manufacturing expanded 3.6 percent in the second quarter from the first, matching the previous estimate. Manufacturers' confidence is at a 17-month high and factory production climbed seven times faster than expected in July.

Still, interest-rate increases may stifle spending. The Bank of Korea raised borrowing costs for the second time in two months on Aug. 9, bringing the benchmark rate to a six-year high of 5 percent.

``Two interest-rate hikes and sharp corrections in equity markets at home and abroad will eventually work against consumer spending unless household income growth unexpectedly accelerates,'' said Lim Jiwon, an economist at JPMorgan Chase & Co. in Seoul.

The benchmark Kospi index has fallen 6.5 percent since setting a record on July 25. For the year it has gained 31 percent.