(Bloomberg) -- South Korea’s economy gained some speed in the fourth quarter as increased spending by the government helped offset slowing exports.

Gross domestic product expanded 1.0 percent from the previous quarter, versus economists’ median estimate of 0.6 percent. From a year earlier, the economy expanded 3.1 percent, compared with an estimate of 2.7 percent.

Key Insights

• Slowing export growth toward the end of 2018 has sparked fears of an economic slowdown in Korea.
• Growth is expected to slip further this year as semiconductor exports weaken and China’s economy downshifts. The U.S.-China trade war is an added risk.
• "The chip industry will rebound from the third quarter of this year at the earliest, and domestic demand will remain dead at least until the second quarter," said Stephen Lee, an economist at Meritz Securities Co. in Seoul.
• Bank of Korea Governor Lee Ju-yeol has expressed concern over a global slowdown worsening due to the China-U.S. trade tensions, but record household debt and fears of bigger financial imbalances will limit his options for responding.

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• GDP export volumes fell 2.2 percent in the fourth quarter from the previous quarter, when they gained 3.9 percent.
• Import volumes rose 0.6 percent, following a 0.7 percent contraction in the previous quarter.
• Government spending increased 3.1 percent.
• Facilities investment rose 3.8 percent after dropping 4.4 percent in the previous quarter, and construction investment rose 1.2 percent from the earlier quarter, when it contracted 6.7 percent.
• Private spending also rose 1.0 percent.

To contact the reporter on this story: Jungah Lee in Seoul at jlee1361@bloomberg.net

To contact the editors responsible for this story: Brett Miller at bmiller30@bloomberg.net, Henry Hoenig

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