Korea posts strong 3Q growth


Korea's economy is doing better than most in Asia, despite the tech slowdown

By staff and wire reports

SEOUL, South Korea -- South Korea posted 1.8 percent growth for the third quarter, year on year, the central bank said Thursday.

That's a surprisingly strong showing, reinforcing the idea that South Korea's economy is one of Asia's leading performers in the current downturn.

Korea also posted growth over the previous quarter, of 1.2 percent, at a time almost all of Asia is in retreat.

The favorable figures are enough to keep the country out of recession. But experts said they don't yet see a rebound.

Exports not picking up yet

A government stimulus package is masking the extent of the current slowdown, and exports have yet to pick back up.

"You cannot say the economy is bottoming out now," Kwon Hyeuk-boo, an economist with Daishin Economic Research Institute, told Reuters. "The problem lies in exports, which are heavily dependent on the U.S. economy."

He predicted Korean exports will remain poor at least through the first three months of 2002.

Still, the figures are encouraging given the massive drops in third quarter gross domestic product that Singapore and Taiwan posted last week. Both high-tech driven economies are in severe recessions.

South Korea's government has won praise for its attempts to reform its business and industry, much of which crumbled under huge debt loads during the Asian financial crisis. Those efforts are further along than the rest of Asia.

Growth slowing, but consumers still spending

Not surprisingly, Korea's pace of growth is slowing, with the third quarter rate down from 2.7 percent GDP growth in the second quarter, according to the central Bank of Korea's figures.

But it means Korea has also eked out 2.7 percent growth for the first nine months of the year.

Domestic consumption is holding up well. Only a few countries like China, Vietnam and India -- all of which enjoy resilient home-driven demand -- are outpacing Korea at the moment.

Transportation and construction performed particularly strongly, both up more than 7 percent for the quarter.

Like most of Asia, manufacturing and agriculture are moving in reverse. Korea's manufacturing output is suffering the most, dropping 1.6 percent for the three months through September.

Chipmakers such as Samsung Electronics and Hynix Semiconductor are some of the country's most prominent exporters. They're suffering through what they call the worst year in the chip industry's history.

Export demand is likely to get worse for the fourth quarter, with the effect of the September 11 attacks only minimal in the quarter through September.