SKorean economy grows 2.3 percent in 2nd quarter

South Korea's economic growth hits 1-year high in 2nd quarter thanks to government spending

Associated Press

SEOUL, South Korea (AP) -- South Korea's economy expanded at the fastest rate in a year in the second quarter as a government stimulus helped offset smaller capital expenditure.

Bank of Korea said Thursday that Asia's fourth-largest economy grew 2.3 percent in the April-June period from a year earlier. The preliminary figure marks the fastest growth since the second quarter of 2012.

The economy expanded 1.1 percent from the previous quarter, the highest growth in over two years.

The bank attributed growth to the government's stimulus efforts. President Park Geun-hye's administration drew up a $15.3 billion extra budget in April and unveiled measures to boost the real estate market. The government said the extra budget will help create jobs and support small and medium companies.

The central bank made the first rate cut in seven months in May to help the recovery. It also raised the annual outlook for South Korea's economy in 2013 to 2.8 percent growth from 2.6 percent after the government's increased spending.

The second-quarter growth figure underlines that South Korea's economy is on track to recovery. But a stronger recovery hinges on domestic demand including a rebound in capital expenditure. Capital investment by South Korean companies turned lower in the quarter.

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