South Korea’s economy expanded at the fastest pace in 11 years in 2021 thanks to record exports, though a slowdown in capital investment cast a cloud over the outlook for growth this year.
Today’s data from the Bank of Korea showed gross domestic product (GDP) expanded 4.0 per cent in 2021, as demand for exports soared.
From the third quarter, the economy expanded a seasonally adjusted 1.1 per cent in the October-December period, beating the 0.9 per cent expansion tipped in a Reuters poll and up from a 0.3 per cent rise in the third quarter.
Growth in annual terms in the fourth quarter was at 4.1 per cent, also beating a median forecast of 3.7 per cent in the poll.
“The economy got a boost from exports and investment in the final months of last year…Global demand for made-in-Korea will continue and consumption will improve on the back of expanded government spending to keep growth solid this year,” said Chun Kyu-yeon, an analyst at Hana Financial Investment.
South Korea’s economy has had a sharp albeit uneven bounce from the coronavirus slump in 2020 as exports expanded at their fastest annual pace in 11 years while the consumption recovery has been patchy due to social distancing curbs.
A recent Reuters poll of 20 economists forecast the economy to grow 2.9 per cent this year, below the 3.0 per cent projected by the BOK.
Tuesday’s data showed exports were the main driver of growth in the fourth quarter, jumping 4.3 per cent on-quarter. Growth was also helped by private consumption and construction investment, which expanded 1.7 per cent and 2.9 per cent, respectively.
Capital investment declined 0.6 per cent on-quarter following a 2.4 per cent drop in the preceding three months. ― REUTERS