S. Korean economy grows 0.1 pct in Q1 By Kim Soo-yeon

SEOUL, April 24 (Yonhap) -- The South Korean economy expanded 0.1 percent in the first quarter from three months earlier as a sharp decline in exports moderated, the central bank said Friday, averting a much feared recession.

However, the country's gross domestic product (GDP), the broadest measure of
economic performance, shrank 4.3 percent from a year earlier, the Bank of Korea
(BOK) said.
The quarterly growth rate was revised down from a 0.2 percent expansion
prediction made by the BOK in early April. But it contrasts with a 5.1 percent
fall in the fourth quarter. From a year earlier, the economy declined 3.4 percent
in the October-December period.
The quarterly growth rate beat expectations as the South Korean economy had
widely been expected to slip into a recession, or two straight quarters of
negative growth.
"Private spending and construction investment swung to gains and a decline in
exports slowed down in the first quarter," the BOK said in a statement.
Exports of goods, which account for about 60 percent of South Korea's GDP, fell
3.4 percent on-quarter in the three months ended March 31 after declining 12.6
percent in the fourth quarter.
Private spending, one of the main growth engines of the Korean economy, gained
0.4 percent, compared with a 4.6 percent contraction in the preceding quarter.
Facility investment shed 9.6 percent, after falling 14.2 percent three months
earlier, and construction investment rose 5.3 percent, compared with a 3 percent
decline in the final quarter of last year.
The data comes as some budding signs of economic improvement have increased,
raising prospects that a sharp fall in the Korean economy has eased. Industrial
output saw its decline moderate in February and South Korea's trade surplus
reached a record US$4.6 billion in March.
But Finance Minister Yoon Jeung-hyun remained cautious, saying that it is too
early to be optimistic about an economic recovery as negative factors coexist
alongside positive ones. The country's jobless rate rose to 4 percent in March
and 195,000 jobs were eliminated from payrolls, the highest since the Asian
financial meltdown.
The BOK predicted that the local economy will shrink 2.4 percent this year, the
worst performance in more than a decade. The economy may hit bottom in the second
or third quarter, but it is expected to recover very slowly due to uncertainty
about the global recession, it added.
The International Monetary Fund on Wednesday downgraded its 2010 growth forecast
for the Korean economy to 1.5 percent from an earlier prediction of 4.2 percent.
The government and the BOK have made efforts to bolster the slumping economy by
unveiling a string of economic stimulus packages and cutting the key interest
rate. In March, the government unveiled a record 28.9 trillion won (US$21.5
billion) extra budget aimed at creating more jobs and boosting weakening domestic
demand.
On April 9, th BOK froze its key rate at a record low of 2 percent for the second
straight month, saying that a sharp fall in economic activity has moderated. It
had made six consecutive rate cuts totaling 3.25 percentage points into February.