RTTNews - South Korea's GDP growth picked up in the second quarter, by the fastest pace in more than five years, reflecting an improvement in the global economic situation.

Data released by the Bank of Korea Friday said gross domestic product grew 2.3% sequentially in the second quarter, faster than the 0.1% growth in the first quarter. The GDP has grown for the last two quarters, after contracting 5.1% in the fourth quarter of last year.

However, on a year-on-year basis, the GDP contracted 2.5%, slower than a 4.2% fall in the previous quarter. Annually, the GDP has contracted continuously for the last three quarters.

Earlier this month,the central bank raised the forecast for the gross domestic product, reflecting a rise in the stimulus spending, low interest rate environment and stabilization in the global economic conditions.

The Bank of Korea now expects GDP to contract 1.6% this year, while it expects the economy to rebound next year, with a 3.6% growth. The latest projections compare to the bank's earlier estimate for a 2.4% GDP decline in 2009 and 3.5% growth for 2010. Moreover, the central bank expects an annual growth of 0.2% in the second half of the year.

The Bank of Korea also kept the interest rate at a record low of 2% for the fifth consecutive month in its latest monetary policy meeting, amid signs of a economic recovery and a stable inflation. The consumer price inflation eased for the fourth consecutive month in June, the National Statistical Office said. Consumer prices were up 2% year-on-year in June, slowing from a 2.7% rise in the previous month. Compared to the previous month, consumer prices fell 0.1%, after remaining flat in May.

The International Monetary Fund has also raised the outlook for the country, saying the stimulus measures implemented by the government helped to slow its economic downturn. The IMF now forecasts the economy to contract 3% this year, revised from a 4% contraction expected in April.

On the external front too, the South Korean economy has been performing quite well. The country posted a record trade surplus of US$7.44 billion in June, the Ministry of Knowledge Economy said last month. Exports fell 11.3% year-on-year, while imports were down 32.3%. In the first six months of the year, the country posted a trade surplus of US$21.6 billion, which is again the highest on record.

Meanwhile, a report released Thursday by the Asian Development Bank said the East Asian economies has already entered the transition from recession to recovery, although the economic growth was to continue slowing this year.

The Bank has projected a V-shaped recovery for these countries, with the growth dipping sharply in 2009, but regaining last year's pace in 2010.

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