* GDP +0.9 pct in Q1 vs Q4 (Reuters poll: +0.9 pct
* Private consumption +1.0 pct, capital investment +10.8 pct
* Some upbeat signs but heavy consumer debts a drag –
analysts
(Adds OECD report)
By Christine Kim and Choonsik Yoo
SEOUL, April 26 (Reuters) – South Korea’s economy grew at
its fastest quarterly pace in a year in the first three months
of 2012 as the government ramped up spending and exports
rebounded, but the uneven global recovery is keeping the outlook
far from clear.
Asia’s fourth-largest economy grew a seasonally adjusted 0.9
percent in the first quarter from the previous quarter, up from
a 0.3 percent gain in the final quarter of 2011 and matching the
market’s consensus view, central bank data showed on Thursday.
Private consumption, government spending and capital
investment all posted healthy growth, turning around after
suffering losses in the final three months of 2011, the Bank of
Korea’s advance estimates showed.
Some upbeat signs seen in the global electronics industry
and efforts to contain the euro zone crisis bode well for
Korea’s export-dependent economy, but heavy household debts will
continue to drag on private consumption, analysts said.
However, despite the pick-up in quarterly growth, gross
domestic product increased only 2.8 percent in the January-March
period from a year earlier, the slowest in 2-1/2 years, keeping
the outlook for the economy clouded.
“We cannot say for sure if the economy has passed the bottom
after seeing data for a single quarter,” said Kim Young-bae,
head of the central bank’s statistics department.
INTEREST RATES SEEN ON HOLD THIS YEAR
“The most encouraging sign for Asia was the turnaround in
the global semiconductor book-to-bill ratio, which jumped from
1.01 times in February to 1.13 in March,” said Wai Ho Leong,
economist at Barclays Capital in Singapore.
“It shows semiconductor manufacturers are confident enough
to invest in capital equipment and this means that we are in a
stage for a more lasting rise in the IT sector.”
Markets showed a muted reaction to the widely expected
growth figures that also came as Asian shares retained positive
momentum after the U.S. Federal Reserve reassured markets that
it would keep its very accommodative stance to support growth.
Concerns about economic prospects were one reason South
Korea’s ruling conservative party lost seats in April 11
elections, although it clung to a parliamentary majority.
The government has earmarked more than 40 percent of this
year’s planned budget spending for the first quarter, and 70
percent for the first half of 2012, to position the economy to
ride an expected improvement in global growth.
Last week, the Bank of Korea trimmed its economic growth
forecast for 2012 to 3.5 percent from a December forecast of 3.7
percent, citing weak exports and depressed domestic demand.
Private economists have a similar view, with the median
forecast for 2012 growth at 3.4 percent in a Reuters poll this
month, little changed from a 3.5 percent forecast in a January
poll.
Policymakers and analysts have warned of economic growth
staying relatively low for a long time as heavy household debt
stifles consumer spending and the uneven global recovery hurts
corporate investment.
Analysts said the latest growth data and a still uncertain
inflation outlook reinforced the market’s view that interest
rates will stay on hold at least for the remainder of the year.
The Organisation for Economic Co-operation and Development
(OECD), to which South Korea is a member, also lowered its 2012
growth forecast for the country in line with the market’s
consensus but presented an upbeat view for the next year.
In a report released on Thursday, the OECD even called for
the Bank of Korea to resume its monetary policy tightening drive
once the economy “overcomes the current period of uncertainty.”
The Bank of Korea raised the policy interest rate by a total
of 125 basis points between July 2010 and June 2011 from a
record low of 2 percent, but has since kept it at 3.25 percent
on global markets turmoil rooted in the euro zone crisis.
(Additional reporting by Se Young Lee; Editing by Jonathan
Hopfner and Ron Popeski)
