South Korea was able to beat the expert predictions of lower growth in gross domestic product by a spectacular performance of 4.9 % growth. The economy grew 1.5 percent in the fourth quarter, substantial increase from 1.3 percent growth in the preceding quarter comparing to the economic climate prevalent then.
The price spiral of oil and gas during that quarter statistically predicted de-growth in GDP. The economy was able to sustain growth by the momentum in domestic consumption and export growth. The most contributing factors in exports were from machinery and wireless communications equipment.
Experts state that the key reason for this growth, in current economic conditions, are due to the diligent care taken by the policy makers of the country. But growing overseas financial turmoil and inflationary pressures are threatening to slow down the South Korean economy. Annual inflation increased from 3.6 percent last month, breaking the Bank of Korea’s target range of 2.5-3.5 percent.
The demand in surge for Korean products in Asian region has boosted the morale of the economy and it’s expecting repeat performance this year. The central bank estimates predict at least 4.7% growth in the year 2008.
South Korea being the 12th largest economy in the world would be able to sustain growth only if there is a continued interest in their industrial machinery, mobile phones, semiconductors and other goods. Samsung Electronics Co., the world’s second-largest mobile phone maker, and LG Electronics Inc., the fifth-largest, both reported record handset sales in the fourth quarter.
South Korea is also home to the world’s two largest computer memory chip makers, Samsung and Hynix Semiconductor Inc. Once again the South Korean economy looks forward to the performance of their own global players and domestic consumption to bring down inflation and sustained economic growth in the current year.