South Korea’s economy retreated 0.2 percent in the final quarter against the third quarter when memory chip demand peaked, but managed to run at a pace above 3 percent for the first time in three years for full 2017 as domestic demand slowly tracked rebounding global economy.

According to preliminary data released by the Bank of Korea on Thursday, the country’s real gross domestic product (GDP) in the final three months of 2017 fell 0.2 percent from the previous quarter that performed its best in seven years with a growth of 1.5 percent.

Against a year-ago period, the GDP grew 3.0 percent in the fourth quarter, compared with 2.4 percent in the same period last year.

For full 2017, the GDP expanded 3.1 percent from a year earlier. Last time the annualized growth rate hit above 3 percent was in 2014.

At 11:30 a.m. Thursday, the benchmark Kospi was up 0.85 percent at 2,559.69. The Korean won gained 0.51 percent to 1,062.50 against the U.S. dollar.

“The dip in the quarterly GDP growth was primarily due to reduced working days from the long Chuseok holiday in October that cut down factory production. Also, it was against a robust third quarter. The economy overall maintained growth momentum,” said the BOK.

Exports in the fourth quarter shrank 5.4 percent, compared with a 6.1 percent jump in the previous quarter due to fall in automobile shipment. Imports contracted 4.1 percent on quarter, reversing from a 4.7 percent rise in the previous quarter.

Manufacturing output dwindled 2.0 percent on quarter also owing to reduced car production while service output rose by 0.4 percent on improvement in health and social care sectors.

Private consumption improved 1.0 percent on quarter in the October-December period but construction investment and facilities investment fell 3.8 percent and 0.6 percent, respectively.

The real gross national income sank 1.3 percent on quarter, reversing from a 1.7 percent gain in the third quarter to reflect the deterioration in real GDP and trading conditions, according to the BOK.

For the full 2017, facility investment coupled with improvement in private spending helped the economy to grow at the pace of 3.1 percent. Private consumption gained 2.6 percent. Facility investment fueled by overseas demand for electronic components soared 14.6 percent. Robust housing market also drew 7.5 percent jump in construction spending.

Exports stayed robust throughout last year and delivered an annualized growth of 2.0 percent, while imports surged 7.2 percent.

Real GNI rose 3.4 percent on year thanks to favorable trading terms in mainstay exports like memory chips.

By Kim In-oh and Cho Jeehyun

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