SEOUL - Revised growth figures published Friday confirm that South Korea narrowly avoided falling into recession in the first quarter.

The central bank said the economy grew 0.1 per cent quarter-on-quarter in January-March thanks to the government's fiscal spending and rate cuts, the same pace as previously predicted.

Year-on-year, gross domestic product contracted 4.2 per cent in the first quarter compared with an earlier estimate of a 4.3 per cent decline, the Bank of Korea said.

GDP shrank 5.1 per cent in the final quarter of 2008, the worst performance in 11 years. The first-quarter growth means the country avoided a technical recession ? defined as two consecutive quarters of negative growth.

"In the first quarter the economy posted positive quarterly growth, led by the government's fiscal spending and construction investment," Jung Yung-Taek, head of the central bank's national income statistics team, told reporters.
"Given the expected effect of an extra budget, it is unlikely that the economy will suffer from additional deterioration down the road."

In April parliament approved a record 28.9-trillion-won (S$32.9 billion) extra budget to create jobs and boost domestic demand. The additional budget followed earlier stimulus spending by the government.

The central bank said that without such spending GDP could have declined about 0.6 per cent quarter-on-quarter in January-March. But it said the country is not out of the woods yet.

"A meaningful recovery will come only when consumption and investment from the private sector revive and employment rises," Jung said, according to Yonhap news agency. -AFP