Tuesday's Bank of Korea GDP report showed growth of 1 percent in the fourth quarter, the fastest in three quarters as the economy rode a spurt in government stimulus. Seoul increased spending by 3.1 percent on-quarter, the biggest rise in almost nine years and helped boost construction and capital investment.
The advance estimates beat the median forecast of 0.6 percent in a Reuters survey, as did the fourth quarter's annual pace at 3.1 percent, handily outpacing the 2.0 percent rate in the third quarter and marking the fastest expansion in just over a year.
Yet, some of the promising fourth quarter figures did little to mask a gloomy outlook, as exports declined 2.2 percent on-quarter and remained the biggest risk for South Korea's trade-reliant economy as growth in its biggest market China cools.
"With growth in China and the US (South Korea's two largest trading partners) set to slow in 2019, the outlook for the South Korean export sector is challenging," said Krystal Tan, economist at ANZ.
"Heightened uncertainty about global demand and the maturing global tech cycle will in turn keep private investment weak." Indeed, the full year number told a story of increasing strain across the economy. Growth was 2.7 percent for the whole of 2018, the slowest expansion in six years but matching the 2.7 percent rate projected by the central bank.
The BOK said Asia's fourth largest economy would have contracted in the fourth quarter without government spending, and its contribution to GDP in the fourth quarter was wiped by declining exports.