South Korea growth hits two-year high in first quarter South Korea's economy grew at the fastest quarterly pace for two years in the first three months of the year, boosted by recovering exports and facilities investment. The data, published on Thursday by the Bank of Korea, were stronger than economists had forecast, and could help to ease pressure on the central bank to cut interest rates. Helped by stronger exports, gross domestic product grew 0.9 per cent from the previous three months: the eighth consecutive quarter in which sequential growth fell short of 1 per cent, but the strongest pace since the first three months of 2011. A poll of economists by Bloomberg had showed a consensus forecast of 0.7 per cent. Last year's economic performance fell far short of early expectations, as exports - which account for more than half of South Korea's GDP - were hit by weak demand in Europe and the US. The impact of this on business confidence, coupled with caution ahead of December's presidential election, resulted in manufacturers cutting back heavily on investment in new capacity. This trend halted in the last quarter, as facilities investment grew 3 per cent from the previous three months. The sharp decline in facilities investment last year was because of major concern about Europe and the US. This year we expect to see some pent-up demand," said Kwon Young-sun, an economist at Nomura. Goods exports also showed an improving trend, growing 4.6 per cent from the previous quarter. But this was driven largely by strong petrochemicals sales, and concerns remain about the impact of a weaker Japanese yen on South Korean manufacturing competitiveness - particularly on the country's carmakers, which are also contending with a resurgence of labour unrest. Another sign of the recovery's fragility was the weak figure for consumer spending, which fell 0.3 per cent - the first sequential decline since late 2011. Nonetheless, Mr Kwon said that the new government's spending plans would help to ensure full-year growth in excess of its own forecast of 2.3 per cent. Last week, President Park Geun-hye's government unveiled additional budget expenditure of Won5.3tn ($4.75bn), while it has also pledged to radically increase social spending, to boost the housing market, and to provide greater support to small businesses.