By Cynthia Kim

SEOUL (Reuters – South Korea’s economic growth was at its fastest in eleven years thanks to record exports in 2021. However, a slowdown of capital investments cast doubts over this year’s prospects for further growth.

According to data released by the Bank of Korea Tuesday, gross domestic product (GDP), rose 4.0% in 2021 as export demand soared.

In the fourth quarter of 2018, the economy grew by 1.1%, seasonally adjusted, in the October-December period. This beats the 0.9% growth tipped by Reuters poll, and is up from 0.3% in the third quarter.

Fourth quarter growth in annual terms was 4.1%. This is also above the average forecast of 3.7%.

On Jan. 14, the BOK raised its benchmark rate to pre-pandemic levels, signaling that it could tighten as inflationary and growth pressures continue to be strong.

“The economic recovery was boosted by investment and exports in the last months of the year… Global demand for Made-in Korea will persist and consumer spending will increase due to increased government spending,” Chun Kyuyeon (an analyst at Hana Financial Investment) said.

South Korea has seen a strong, although uneven rebound from the coronavirus recession in 2020. The country’s exports have grown at an unprecedented pace over the past 11 years. However, the recovery in consumption has been slow due to social disconnection curbs.

According to Reuters, 2.9% growth is expected this year according to 20 economists. This figure is below the 3.0% forecast by the BOK.

The data released Tuesday showed that exports were the primary driver of fourth-quarter growth, rising 4.3% quarter over quarter. Private consumption and construction investments also contributed to growth, rising 1.7% and 2.9% respectively.

After a 3.4% decline in capital investment over the three previous months, capital investments declined 0.6% quarter-on-quarter