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South Korea’s economy recovered at a faster-than-expected pace in the last quarter thanks to strong exports and sustained investment in facilities, bringing Asia’s fourth-largest economy back to pre-pandemic levels .

Seasonally adjusted gross domestic product rose 1.6 percent between January and March from the previous quarter, the Bank of Korea said on Tuesday. It was faster than the median estimate of 1.0% growth in a Reuters poll and followed the 1.2% growth recorded in the December quarter.

The economy has regained momentum after shrinking 1.0% last year, its worst contractions since the Asian financial crisis of 1998. This month, BoK Governor Lee Ju-yeol predicts growth economic this year by about 3.5%, which will be its fastest annual growth in a decade.

The growth rate “proves that the economy’s ability to recover is relatively strong,” Finance Minister Hong Nam-ki said on Facebook, although the weakness in the labor market remained a concern.

The strong recovery was driven by strong global demand for chips and cars, South Korea’s main export commodity, while domestic consumption remained sluggish due to tight distancing measures.

“Strong external demand has led Korean companies to invest in more capacity and exports have been improving in the last quarter,” said Alex Holms, economist at Capital Economics. “The main weakness of the economy comes from consumption.”

Lee has signaled the surge in coronavirus infections as further downside risks to growth as South Korea grapples with daily cases reaching three-month highs.

Economists have also warned that a slow rollout of vaccines could derail the economic recovery, with the country’s vaccination rate remaining at just over four percent, compared to 42 percent in the United States.

A recovery in consumption is likely to be limited until the majority of South Korea’s 52 million people are vaccinated, economists say.

South Korea aims to achieve collective immunity by November, but its vaccination campaign has been hampered by delayed shipments of Covid-19 vaccines.