The Korean economy expanded at its fastest clip in two years in 2013, due largely to brisk exports and steady consumer spending, the central bank announced on Wednesday.
The country’s gross domestic product advanced 3 percent on year at the end of 2013, up 2.8 percent from its earlier estimate in January.
A recovery of investment in the construction industry also helped push up the rate, the Bank of Korea said.
“Investment on infrastructure was sluggish (in 2013) but overall the country saw steady growth in both consumer spending and exports,” Jung Yung-taek, director general of the BOK’s economic statistics department, said at a press meeting Wednesday.
At a separate briefing, Finance Minister Hyun Oh-seok said that the economic recovery trend “seems to be continuing” in terms of employment, industrial output and investment in the construction sector.
The BOK, however, revised downward its fourth quarter growth to 3.7 percent on year, from an earlier estimate of 3.9 percent, due mainly to the advancement of the base year to 2010 from 2005, it said.
The 2013 data marked the fastest yearly growth since 2011 when the GDP grew 3.7 percent.
The positive results came amid the government’s optimism for the local economy, despite the persisting external risks, such as the U.S. stimulus tapering measures and a slowdown in China’s economic growth.
Exports posted solid growth of 4.3 percent last year, while manufacturing production expanded 3.3 percent on-year, the BOK said. Consumption rose by 2 percent to help fuel the high growth rate. Further, investment in the construction sector climbed 6.7 percent after recording negative growth in 2012.
Meanwhile, the nation’s gross national income or GNI, a gauge of the purchasing power of the population, also grew $1,509 or 6.1 percent from $24,696 in 2012 to a new record high of $26,205 in 2013, according to the Bank of Korea Wednesday.
The central bank noted that the 2013 growth data was also due partly to the revised national account system. The BOK recently completed a transition of its standards for calculating national accounts to the internationally-accepted System of National Accounts 2008.
Under the new standards, spending on research and development and intellectual property products are listed as investments in the national accounts.
Korea’s R&D spending-to-GDP ratio stood at 4.03 percent in 2013, marking the second-highest level worldwide.
“The changes in the national accounts were inevitable to ensure compliance with the international community’s demands,” Jung noted.
Market insiders estimate that the revised standard will likely affect the BOK’s future GDP growth forecast. The BOK predicted in January that the growth outlook on the Korea’s 2014 GDP growth at 3.8 percent and predicted that the economy would expand 4 percent in 2015.
By Oh Kyu-wook (firstname.lastname@example.org