South Korea’s economy grew at a faster pace than expected in the second quarter. This was driven by an influx of investments indicating a growing confidence in the economy.

According to estimates by the Bank of Korea, the economy expanded by 1.5 per cent in Q2 from the previous quarter, and by 7.2 per cent from 2009. Earlier estimates by the central bank and a Reuter’s survey were 1.2 per cent and 1.1 per cent respectively.

Economists remain confident about continued growth into the third and last quarter of 2010 however the economy will grow at a moderated pace in the second half of the year.

Despite an anticipated cooling of global demand, electronic firms such as Samsung Electronics and carmakers are seeing growth boosted by higher spending in information technology and the growth in export markets respectively.

The growth of exports by 7.1 per cent in the second quarter spurred companies to increase their spending on production equipment and facilities by 8.1 per cent.

Production capacity is on the rise as well. Recent date showed that South Korean factories were operating at 82.8 per cent of capacity in May, the highest in 15 years.

While first quarter growth was fuelled by high government spending, the private sector is fast taking over as the main engine for growth.

Hyundai Motor announced an increase of 71 per cent in Q2 net profit. This was driven by strong exports and growth in its overseas operations in China and the US.

Robust investments also caused imports to grow by 9 per cent in the past quarter, effectively cancelling out export growth.