Exports boost South Korea economy

http://news.bbc.co.uk/go/rss/-/1/hi/business/8645959.stm

Version 0 of 1.

South Korea's economy grew by 1.8% in the first three months of the year, faster than analysts expected, as exports rose sharply.

In the previous quarter, the economy grew by 0.2%.

South Korea has recovered strongly from the global economic downturn, boosted by record low interest rates and government stimulus measures.

The Bank of Korea has forecast that the economy will expand this year at its fastest rate since 2006.

"The recovery is pretty well established," said Oh Suk-tae at Standard Chartered First Bank Korea.

"Growth is clearly picking up again."

'Rate hikes'

Exports rose by 3.4% in the first quarter, which helped to drive overall economic growth.

Analysts said that despite the strong recovery, the government would not yet withdraw stimulus measures.

However, they said that concerns about the economy overheating could lead to a rise in interest rates, which currently stand at a record low of 2%, later in the year.

"Concern about the potential impact of keeping rates too low for too long will prompt policy makers to deliver rate hikes in the second half of the year," said Brian Jackson at the Royal Bank of Canada in Hong Kong.

South Korea's economy is the third largest in Asia.