South Korean consumer sentiment hits 7-year high

SEOUL, South Korea – Consumer confidence in South Korea rose to its highest level in more than seven years, the central bank said Tuesday, amid an accelerating recovery in Asia's fourth-largest economy.

The composite consumer sentiment index for October recorded a reading of 117 in October, up from 114 in September, the Bank of Korea said in a report. It was the best result since a reading of 117 in the first quarter of 2002. The survey became monthly in September last year.

The result comes one day after the central bank announced that South Korea's economic growth accelerated in the third quarter to its best showing since the first three months of 2002 amid strength in manufacturing and capital spending.

Gross domestic product grew 2.9 percent in the three months ended Sept. 30 compared with the previous three months when it expanded 2.6 percent. The last time the expansion was stronger was in the first quarter seven years ago when it grew 3.8 percent.

South Korea _ home to industrial powerhouses such as Samsung Electronics Co. and Hyundai Motor Co. _ has been recovering from its worst downturn since the 1997-98 Asian financial crisis.

Weakness in the South Korean won and government stimulus programs overseas has helped boost manufacturing and exports. A record-low benchmark interest rate of 2 percent and government spending at home have also stimulated growth.

In South Korea, manufacturing expanded 8.7 percent in the third quarter, capital spending grew 8.9 percent, consumer spending _ boosted by purchases of automobiles _ gained 1.4 percent and exports of goods expanded 5.1 percent.

Lim Ji-won, economist at JP Morgan in Seoul, said the 2.9 percent quarter-on-quarter growth in GDP equaled an annualized expansion of 12.3 percent.

The GDP numbers released Monday are preliminary and subject to revision. The Bank of Korea does not provide an annualized growth figure.

South Korea's unemployment rate fell in September to a nine-month low of 3.4 percent, consumer and business sentiment have risen and the current account _ the country's broadest measure of trade _ is firmly back in surplus after a deficit last year for the first time since 1997. Hyundai and affiliate Kia Motors Corp. reported record quarterly net profit in the third quarter as sales rose.

The GDP figure marks the third straight three-month period that the economy has grown. It eked out a 0.1 percent expansion in the first quarter after having contracted 5.1 percent in the final three months of 2008.

The central bank also said that the economy grew in the third quarter compared with the same period last year, expanding 0.6 percent. That snapped three straight quarters of year-on-year contraction.

The economic performance of South Korea and other Asian countries this year is in stark contrast to the U.S. and Europe, where some remain mired in recession.