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South Korea defies regional slowdown
Real estate news By Kim Kyoungwha
October 20, 2007
South Korea's economy will expand faster than expected this year, powered by exports and a revival in consumer spending, according to a forecast by the Bank of Korea. In a report released to the parliament in Seoul yesterday, the central bank did not provide an updated estimate of the nation's gross domestic product. It previously forecast the economy would grow by 4.5 per cent this year. "The domestic economy's expansion is quickening [with] brisk exports and a consumption recovery," the bank said. "Manufacturing and services businesses are both showing high growth."
The Finance Minister, Kwon Okyu, said this week the economy would grow almost 5 per cent this year, topping his previous estimate. Exporters are selling more to Asia, Europe and the Middle East as US demand slows, while South Korean consumers, confident of their employment prospects, are increasing their spending. But the central bank said it was heeding the risks, such as high oil prices and the US housing recession, that could affect South Korea. The nation's economy grew at the quickest pace in almost four years in the second quarter, advancing 1.8 per cent from the previous three months on a surge in exports.
China's appetite for raw materials is helping the region weather a slowdown in demand from the US, which is mired in its worst housing slump in 16 years. South Korea's department store sales rose as soaring share prices and higher wages boosted consumer confidence in September to its highest in 18 months. The bank said lending to smaller businesses was surging while demand for home loans had slowed, contributing to an overall cooling in money-supply growth.
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