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Live news: South Korean economy grew at fastest pace in 11 years in 2021

South Korea’s economy expanded at its fastest pace in 11 years in 2021 on a surge of exports as reduced production in locked down countries fuelled demand for semiconductors.

Gross domestic product grew 4.1 per cent last year, data from the Bank of Korea showed on Tuesday, marking a rebound from negative growth of minus 1 per cent in 2020, when strong performance by technology manufacturers failed to offset a pandemic-driven drop in consumption and disruption to exports.

The South Korean economy expanded 1.1 per cent in the fourth quarter of 2021 compared to the quarter before, while private consumption rose 1.7 per cent as the country eased social distancing restrictions in October and spending on transport and dining out picked up. The government reinstated curbs last month following a rise in cases of the high infectious Omicron variant.

Exports increased 4.3 per cent in the October-to-December period on a boom in demand for server memory chips as well as coal and petroleum products, while manufacturing rose 1.1 per cent thanks to rises in electrical equipment.

The Bank of Korea raised its benchmark rate to pre-pandemic levels, from 1 to 1.25 per cent, last week in an effort to ease inflationary pressures, despite rising Covid-19 cases.

Alex Holmes, an economist at Capital Economics, said that while the outlook for 2022 remained upbeat, growth is likely to slow again this quarter. “A looming wave of the Omicron variant threatens to weigh on consumer spending, particularly on face-to-face services,” he said.

Read More: Live news: South Korean economy grew at fastest pace in 11 years in 2021

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