Korea GDP Grow 6.24% in 2010, Hitting 8-Year Peak

We have to look to the long run. If economic fundamentals don’t improve, temporarily increase in GDP won’t mean much.

From Yonhap News:

The South Korean economy grew 6.2 percent last year, the fastest expansion in eight years, as exports remained robust and facility investment jumped amid improved consumer spending, the central bank said Wednesday.

The country's gross domestic product (GDP), the broadest measure of economic performance, was revised up from an earlier estimate of 6.1 percent for last year, according to the Bank of Korea (BOK). It marked the fastest growth since Asia's fourth-largest economy expanded 7.2 percent in 2002.

In South Korea, however, oil price gains and continued economic growth are exerting upward pressure on inflation. BOK Gov. Kim Choong-soo said keeping price stability is "the greatest challenge" facing the economy as consumer prices will likely remain high for some time.

The BOK has hiked the key rate in four steps to 3 percent since July last year from a record low of 2 percent.

Exports of goods, which account for about 50 percent of the local economy, grew 15.8 percent last year, up from an earlier estimate of 14.1 percent. Private spending, one of the main growth engines of the Korean economy, expanded 4.1 percent in 2010, the same pace as earlier expected.

Facility investment jumped 25 percent, better than an earlier 24.5 percent expansion, while construction investment declined 1.4 percent, better than an earlier estimate of a 2.3 percent contraction.

http://english.yonhapnews.co.kr/business/2011/03/30/73/0503000000AEN20110330002100320F.HTML

From Korea Herald:

South Korea's top central banker has stressed the need to steadily tackle growing household debt, which market watchers fear will undercut the country's economic growth momentum.

South Korean household debts came to nearly 800 trillion won ($721.8 billion) as of the end of last year, which analysts say had been stoked by the country's low borrowing costs.

In a dinner meeting with reporters Tuesday to mark his first year in office, Bank of Korea (BOK) Gov. Kim Choong-soo said eurozone debt fears, Japan's nuclear crisis and ongoing political unrest in the Middle East and North Africa are uncontrolled factors, but that household debt and falling savings rates in the private sector are problems that authorities could "manage."

http://www.koreaherald.com/business/Detail.jsp?newsMLId=20110330000572

From Chosun Ilbo:

Korea is no longer one of the world's most frugal nations as figures show that household savings last year stood far below the average of other developed countries.

According to a report released by the OECD on Monday, Korea's household savings rate, which is savings divided by disposable income, came to 2.8 percent in 2010.

The rate is much lower than the 6.1 percent average of 20 OECD member countries.

The sharp drop is mainly due to slow income growth, tax burdens and falling interest rates.

http://english.chosun.com/site/data/html_dir/2011/03/08/2011030801403.html