The country's economic growth hit a 14-quarter high in the second quarter on strong exports and the rapid growth of the financial industry, the Bank of Korea (BOK) said Monday.

The gross domestic product (GDP), the total output of goods and services produced in the country, expanded a revised 1.8 percent during the April-June period from a quarter ago, up from an earlier 1.7 percent estimate.

The second-quarter growth figure is the highest since the fourth quarter of 2003, when the GDP rose 2.7 percent. Year-on-year, the GDP expanded 5 percent.

This is compared with a 0.9 percent growth in the previous two quarters.

The gross national income (GNI), a barometer of the nation's purchasing power, rose 2.2 percent in the second quarter from three months earlier, a turnaround from a 0.9 percent contraction in the first quarter. The GNI rose 4.7 percent year-on-year, picking up from a 3.4 percent growth in the first quarter, the central bank said.

"Export growth almost doubled to 5.2 percent in the second quarter, as expected, on brisk outbound shipments of petrochemicals, machinery and ships,'' said Ahn Kil-hyo, an official of the BOK's economic statistics division. "But growth in private spending was nearly halved to 0.8 percent.''

The manufacturing industry expanded 3.6 percent in line with an initial estimate, a turnaround from a 0.9 percent drop three months earlier, on brisk sales of semiconductors, ships, machinery and cars.

Service businesses grew at a faster-than-expected pace of 1.3 percent on strong growth in the finance and insurance sectors and a bull run on local bourses.

But the construction sector sank 1.8 percent, matching an advanced estimate, a turnaround from 1.4 percent growth in the previous quarter, the bank said.

Plant investments, mainly in machinery, rose at a slower-than-expected pace of 3.4 percent, while construction investment fell 1.4 percent.

"We are confident that the economy will grow 4.5 percent this year, as earlier estimated,'' Ahn said.

The central bank in July raised its annual growth forecast for 2007 by 0.1 percentage point to 4.5 percent, citing strong exports and a recovery in domestic spending. The Ministry of Economy and Finance last week voiced confidence that the economy will remain on a stable growth track on the back of strong exports and reviving consumer spending.

Korea Times, September 3, 2007