South Korea narrowly avoided slipping into recession, and the country’s corporate giant, Samsung Electronics, reported better results than expected for the first quarter — news that provided some relief to an economy that continues to be battered by crumbling exports.
Data for the first quarter, released Friday, showed that the South Korean economy grew 0.1 percent from the previous three months, rebounding from a 5.1 percent slump during the previous quarter and surprising many analysts who had expected a slight contraction.
At the same time, Samsung, the biggest exporter in the nation, reported a sharp drop in profit, but the results topped most analysts’ expectations. That followed a similar picture at the carmaker Hyundai, whose reduced profits, reported Thursday, nevertheless beat expectations.
Frederic Neumann, senior Asia economist at HSBC in Hong Kong, said the growth figures were a “welcome surprise,” and showed that the government’s fiscal stimulus was gaining traction more quickly than forecast.
South Korea has announced billions in tax cuts and spending measures to prop up the economy, while the central bank has cut interest rates by 3.25 percentage points since October.
South Korea’s exports have received relief from the weakness of the won, which has made their goods significantly cheaper for overseas customers.
This was, in part, reflected in Samsung’s and Hyundai’s results.
Samsung, which manufactures computer chips, LCD screens and mobile phones and sells 90 percent of its products outside South Korea, generated a net profit of 619.2 billion won, or $462 million, in the January-March quarter.
That is down 72 percent from a year earlier, but substantially better than analysts had forecast. It also represents a turnaround from the loss seen during the last quarter of 2008.
Demand for chips has been battered by the downturn, but mobile handset sales fared much better than predicted. Earnings at the mobile phone division rose 2 percent, to 940 billion won, and its 12 percent operating margin topped the 10.4 percent margin generated by the handset division at Nokia, an industry rival.
Elsewhere in the region, data from Taiwan on Friday showed export orders down 24.3 percent in March from a year earlier — a smaller decline than in February. In Singapore, which is in a deep recession, industrial production in March slumped 33 percent from a year earlier, more than analysts had expected.
Data for the first quarter, released Friday, showed that the South Korean economy grew 0.1 percent from the previous three months, rebounding from a 5.1 percent slump during the previous quarter and surprising many analysts who had expected a slight contraction.
At the same time, Samsung, the biggest exporter in the nation, reported a sharp drop in profit, but the results topped most analysts’ expectations. That followed a similar picture at the carmaker Hyundai, whose reduced profits, reported Thursday, nevertheless beat expectations.
Frederic Neumann, senior Asia economist at HSBC in Hong Kong, said the growth figures were a “welcome surprise,” and showed that the government’s fiscal stimulus was gaining traction more quickly than forecast.
South Korea has announced billions in tax cuts and spending measures to prop up the economy, while the central bank has cut interest rates by 3.25 percentage points since October.
South Korea’s exports have received relief from the weakness of the won, which has made their goods significantly cheaper for overseas customers.
This was, in part, reflected in Samsung’s and Hyundai’s results.
Samsung, which manufactures computer chips, LCD screens and mobile phones and sells 90 percent of its products outside South Korea, generated a net profit of 619.2 billion won, or $462 million, in the January-March quarter.
That is down 72 percent from a year earlier, but substantially better than analysts had forecast. It also represents a turnaround from the loss seen during the last quarter of 2008.
Demand for chips has been battered by the downturn, but mobile handset sales fared much better than predicted. Earnings at the mobile phone division rose 2 percent, to 940 billion won, and its 12 percent operating margin topped the 10.4 percent margin generated by the handset division at Nokia, an industry rival.
Elsewhere in the region, data from Taiwan on Friday showed export orders down 24.3 percent in March from a year earlier — a smaller decline than in February. In Singapore, which is in a deep recession, industrial production in March slumped 33 percent from a year earlier, more than analysts had expected.
