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S. Korea's economic growth hits over 2-year high in Q3

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(Globalpost/GlobalPost)

By Kim Soo-yeon

SEOUL, Oct. 25 (Yonhap) -- The South Korean economy continued to grow at the fastest pace in more than two years in the third quarter on improving domestic demand and a pickup in facility investment, the central bank said Friday.

Korea's gross domestic product (GDP), the broadest measure of economic performance, grew 1.1 percent in the July-September period from three months earlier, after expanding at an identical pace of 1.1 percent in the second quarter, according to the Bank of Korea (BOK).

It marked the fastest quarterly growth since a 1.3 percent on-quarter advance in the first quarter of 2011.

From a year earlier, the economy grew 3.3 percent in the third quarter, the fastest on-year growth in seven quarters, after gaining 2.3 percent on-year in the second quarter.

The data came as Finance Minister Hyun Oh-seok said Thursday that the local economy is showing signs of escaping from the low growth trend, expressing optimism over the growth momentum.

The BOK earlier said that the quarterly growth is likely to reach around 1 percent every quarter into next year. The bank's 2013 growth estimate stood at 2.8 percent.

But the BOK recently revised down its 2014 forecast for Asia's fourth-largest economy to 3.8 percent from 4 percent, citing lingering downside risks.

The central bank froze the key interest rate at 2.5 percent for the fifth straight month in October after making the first rate cut in seven months in May.

The central bank said that downside risks overwhelm upside risks to growth, citing uncertainties over the Federal Reserve's monetary stimulus tapering and the instability of oil prices as negative factors for the Korean economy.

Exports, which account for around 50 percent of the GDP, declined 0.9 percent on-quarter in the third quarter after growing 1.8 percent on-quarter in the previous quarter.

Private spending rose 1.1 percent on-quarter last quarter after gaining 0.7 percent in the second quarter. But the growth of government spending sharply slowed to 0.1 percent in the third quarter from a 2.4 percent gain in the previous quarter.

Facility investment rose 1.2 percent last quarter, compared with a 0.2 percent on-quarter decline in the previous quarter. Construction investment advanced 2.7 percent, compared with a 3.4 percent on-quarter expansion three months earlier, the BOK said.

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