South Korea’s GDP growth has never been stronger in 2021, thanks to the boom in exports.

Data released Tuesday by the Bank of Korea shows that gross domestic product (GDP) grew by 4.0% in 2021, due to rising demand for exports.

Compared to the third quarter, the economy grew by 1.1% in seasonally adjusted data for the period October-December, which is higher than the expansion of 0.9% announced in a Reuters poll and the increase in 0.3% recorded in the third quarter.

Year-on-year growth in the fourth quarter was 4.1%, also beating the median forecast of 3.7% in the survey.

On January 14, the BOK raised its benchmark interest rate to pre-pandemic levels and signaled that it may tighten it further as growth and inflationary pressures remain strong.

“The economy has been boosted by exports and investment in the last months of last year. Global demand for Korean products will continue and consumption will improve thanks to increased government spending to maintain solid growth this year,” said Chun Kyu-yeon, analyst at Hana Financial Investment.

South Korea’s economy experienced a significant, albeit uneven, rebound from the coronavirus crisis in 2020. Exports grew at their fastest annual rate in 11 years, while the recovery in consumption was uneven due to social distancing measures.

A recent Reuters poll of 20 economists predicts economic growth of 2.9% this year, down from the 3% forecast by the BOK.

Data released on Tuesday showed that exports were the main driver of growth in the fourth quarter, jumping 4.3% quarter-on-quarter. Growth was also helped by private consumption and investment in construction, which increased by 1.7% and 2.9%, respectively.

Capital investment fell 0.6% quarter-on-quarter, after falling 2.4% in the previous three months.

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