South Korea's 1Q growth hits 3-year high on tech exports, new housing supply

SEOUL, South Korea – South Korea’s economic growth hit its highest level in three years in the first quarter, boosted by new home construction and exports of electronics.

The Bank of Korea said Thursday that Asia’s fourth-biggest economy expanded 3.9 per cent over a year earlier, the fastest clip since the first quarter of 2011.

The central bank said production of tech devices and petroleum products lifted the manufacturing industry as well as exports. A jump in new housing was a boon for the construction industry.

South Korea’s economy has been posting about 1 per cent growth each quarter since April 2013, a step up from rates below 1 per cent in the previous two years.

Last month, the central bank raised its growth forecast for this year to 4 per cent from 3.8 per cent. The upgrade reflected a change in methodology.

A drop in exports to China and weak retail sales in the aftermath of a ferry sinking in April that traumatized South Korea are risks to the economic recovery.

Seven weeks after the sinking, 289 bodies have been recovered and 15 are still missing. Two divers have died during the search. The disaster has caused an outpouring of national grief, with family members of missing people still camping out at a port.

Bank of Korea policymakers said last month that it was too early to say whether the disaster will have a lasting impact on the economy.

Exports to China, South Korea’s top market, posted an unexpected decline in May, possibly reflecting the slowdown in the world’s No. 2 economy.