SEOUL, South Korea (AP) — South Korea’s economy expanded at the fastest pace in a year in the second quarter as government stimulus helped offset cash hoarding by companies.
The 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 is the fastest growth since the second quarter of 2012.
The economy expanded 1.1 percent from the previous quarter, the best growth in over two years.
The bank attributed the improved growth rate 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-sized companies.
The central bank cut interest rates for the first time 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 to reflect the boost from the government’s increased spending.
The second-quarter growth figure underlines that South Korea’s economy is on track for a recovery. But a stronger performance hinges on domestic demand, including a rebound in capital expenditure. Capital investment by South Korean companies turned lower in the quarter.