South Korea

South Korea's economic growth accelerated in the 4th-Q on strength in exports and manufacturing, the Bank of Korea said recently, with economists expressing optimism it can weather a possible global slowdown. GDP expanded 5.5 % in the October-Dec. quarter compared to the same period in 2006 and outpaced the 3rd-Q's 5.2% growth, the central bank said. Preliminary results beat the central bank's own forecast of a 5% expansion as well as the 5.4% average of economists surveyed by Dow Jones Newswires. For all of 2007, the economy grew 4.9%, slightly below the 5% recorded in 2006. A Citibank economist said that while South Korea's economy was unlikely to match the fourth quarter's rapid pace into this year, any weakening would be moderate. He said they don't expect any big or significant slowdown in Korea's growth, adding that as long as the expansion stays above 4% the Bank of Korea was unlikely to cut its key interest rate, which stands at 5%. But a senior economist at JP Morgan in Seoul cautioned that much of the strength in the fourth quarter was concentrated in Oct. and Nov. and may not reflect the possible impact on the South Korean and global economy of slower demand from the U.S., which some believe is sliding into a recession. She said South Korea's reduced export dependence on the U.S. over the past 5 years while relying more on demand in neighboring China, the country's largest trading partner. But it's an open question how far China can go if the U.S. falls into recession, she said. China is the destination for about 22% of the country's exports, while the U.S. takes 13%, said Citibank's economist. South Korean exports, that rose 16% in the quarter, were led by shipments of industrial machinery and mobile phones, the central bank said. The manufacturing sector grew 9.3%, led by gains in semiconductors and other goods. South Korea is also home to the world's two largest computer memory chip makers, Samsung and Hynix Semiconductor. Goldman Sachs said in a report it didn't expect any major slowdown in exports as "diversification to developing countries and oil producers will likely continue to support headline export growth despite a slowing U.S." South Korea's economy, the world's 12th-largest, also expanded at seasonally adjusted 1.5% in the 4th-Q from the 3rd, also beating expectation. That comes to an annualized rate of 6.3%, the economist at Citibank said. The Bank of Korea does not provide an annualized figure. China, closing in on Germany to be the world's 3rd-largest economy, announced recently its economy expanded 11.2% in the 4th-Q, saying fast growth should continue.