Rate-hike predicted in South Korea with fast-paced growth rate

31 Oct 17

South Korea’s economy grew at the fastest pace in seven years last quarter – with the acceleration expected to continue into next year. 

The country’s chief policy adviser said he sees the economy growing by more than 3% this year and in 2018.

The gross domestic product expanded 1.4% quarter on quarter in the period between July and August, according to an estimate from the Bank of Korea. This follows a growth of 0.6% in the second quarter. 

The annual growth rate was 3.6%, up from 2.7% in the June quarter.

Kim Doo-un, an economist at Hana Financial Investment, told Reuters he thought South Korea’s increased growth was likely to lead an interest hike for the country. 

“This kind of robust growth is surely a rate-hike ingredient,” the economist said.

“Shipments out of semiconductors [materials with conductivity between conductors and nonconductors] and [the] IT sector in general have been good, and it also seems exports of services also improved in the third quarter.”

Experts said the growth was due to renewed investment in construction and a return of exports, which grew 6.1% quarter on quarter.

Jang Ha-sung, the chief of staff to president Moon Jae-in, also told Reuters that the government will next month announce measures to encourage corporate innovation and start-ups, while focusing on fading out corrupt business practices. 

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