Asian Rebound Continues

South Korea saw its GDP expand 2.9% in the third quarter-nearly 12% at an annual rate. Together with the almost as strong growth rate recorded in the second quarter this means that the entire drop in production that we saw during the financial crisis has been recovered. GDP is 0.6% higher than a year ago.

The strong Korean growth report follows similarly strong reports from China and Singapore. It seems likely that other Asian economies, such as Hong Kong and Taiwan, will report robust growth. Even Japan will probably have positive quarterly growth, though its growth will likely not be as strong as in the rest of Asia and unlike in for example Korea, GDP will remain lower than a year ago.

The main source of this strong Asian recovery is as I pointed out earlier, rapid growth in domestic demand in China.