Korea’s longest recession finally ended

The Korean economy finally got out of its longest recession period as its quarterly growth recovered the 1 percent range for the first time since the second quarter of 2011. Most economic pundits had predicted that the country’s growth rates would remain in the zero percentage range through the second half of this year.

According to an announcement on the second quarter of GNP by Bank of Korea on Thursday, real gross national product increased by 1.1 percent from the previous quarter. The country’s quarterly growth had remained in the zero percentage range for eight consecutive quarters after recording 1.3 percent growth during the first quarter of 2011. Compared with the corresponding period of last year, Korea’s gross national product rate rose by 2.3 percent in the second quarter.

Government spending and construction investment led the economic growth during the second quarter. The increase in government spending doubled compared with the previous quarter with 2.4 percent. Investment in the construction sector also soared by 3.3 percent as the government vigorously invested into social overhead capital and the construction of innovative cities progressed at a rapid pace.

A source at the Bank of Korea said, “The government’s contribution to the 1.9 percent growth was 0.3 percentage point in the first half of the year, and it is expected to grow bigger in the latter half of this year.”

IT products such as smartphones and semiconductors led the growth in export, which takes up the greatest share in Korea’s gross domestic product. Export saw a quarterly increase of 1.5 percent. Benefits from increased export mostly led by certain conglomerates, however, was not felt by the people. Over the same period, gross domestic income, which indicates the nation’s real consumption power, rose by 2.7 percent thanks to the decrease in global oil and semiconductor prices.

The Bank of Korea said that despite negative external factors such as weak yen and slow growth of China, the domestic economy will grow more toward the end of this year as the government originally forecast.

Jeong Yeong-taek, the head of the central bank`s economic statistics bureau, said, “Korea’s growth rates are still low, remaining below its potential growth rate of the 3 to 4 percent range. But the Korean economy is more active than expected amid harsh environments.”