Korea’s economy grew at its fastest pace in five years during the July-September period thanks to a rebound in private consumption, but some local analysts are concerned about the lingering uncertainties of global deflation.

The Bank of Korea said the country saw its gross domestic product in the third quarter grow by 1.2 percent from the previous quarter, the highest growth rate since it peaked at 1.7 percent in the second quarter of 2010.

Quarterly growth has stayed below 1 percent since the second quarter of 2014, when it posted 0.5 percent, amid a critical slump in domestic demand and worsening environment for exporters.

Some analysts say the 1.2 percent growth holds significance for hopes of a future bounce-back, given the near-flat 0.3 percent rate in the second quarter. They point out that the figure surpassed the BOK’s earlier growth estimate of 1.1 percent.

But some critics say that the rapid rebound was mainly attributable to the extreme slump in consumption in the second quarter, when the Middle East respiratory syndrome outbreak posed a serious economic blow to the nation.

The central bank clarified that the supplementary budget, led by the Finance Ministry, had a positive effect on private consumption. “Purchases of durable goods increased, and the vitalized real estate sector spurred the growth,” said a BOK official.

Consumer spending rose 1.1 percent, an apparent turnaround from the 0.2 percent drop in the second quarter.

Government spending expanded from 0.8 percent to 1.9 percent over the period. Facility investment, another key factor, rose 2 percent, an increase from 0.5 percent.

Exports, however, contracted 0.2 percent despite the Korean currency’s sharp slide against the U.S. dollar compared to the first two quarters.

The BOK said the ongoing doldrums in exports could be attributed to weak global demand for liquid crystal displays, chemical products and ships ― some of Korea’s key industries.

The central bank and some private think tanks expect the 2015 exports to drop by between 4 and 6 percent, compared to last year.

A poll by the BOK showed that local manufacturers remain pessimistic about the business conditions in October. The business survey index of manufacturing businesses stood at 70 for October, down from 71 in the previous month.

A reading below 100 means pessimists outnumber optimists, while a reading above 100 means the opposite.

By Kim Yon-se (kys@heraldcorp.com)