South Korea’s economy grew at its slowest pace for three quarters in the July-to-September period because of weak consumer spending and a fall in corporate investment amid the global economic gloom, the central bank said yesterday.
GDP grew 0.7 percent in the third quarter, slowing down from 0.9 percent in the second quarter.
Year-on-year, Asia’s fourth-largest economy grew 3.4 percent in the July-to-September period from the same period last year, the same pace as in the second quarter.
Analysts expect the export-dominated economy to remain subdued for the rest of the year because of the eurozone sovereign debt crisis and the weak US economy.
The central bank is expected to leave the key interest rate unchanged at 3.25 percent for a considerable period.
The Bank of Korea said exports gained 2 percent quarter-on-quarter in the third quarter after expanding 1.2 percent three months earlier.
Private spending rose by 0.6 percent, slowing down from a 0.9 percent increase in the previous quarter.
Facility investment fell 0.4 percent after growing 3.9 percent in the second quarter. Construction investment grew 2.2 percent after rising 1.6 percent in the April-to-June period.
“Capital spending fell in the third quarter as companies delayed their investment amid high economic uncertainty,” senior central bank official Kim Young-bae told a press conference.
“Consumer spending remained weak as high inflation and sharp falls in stock prices, driven by Europe’s debt crisis, dented domestic demand,” Yonhap news agency quoted him as saying.
Kim said the economy would likely grow below the bank’s previous forecast of 4.3 percent this year, but dismissed talk of a downturn.
“In the fourth quarter, the growth number is forecast to be better than the third quarter. It can be said that the local economy hit the bottom in the third quarter,” Kim said.
Moody’s Analytics agreed, saying growth is slightly below trend, but the economy remains resilient and on track for a soft landing.
In a commentary it said that export figures were particularly strong, suggesting little impact from the easing global economy in the third quarter.
“There isn’t too much cause for concern and our current forecast for 3.6 percent GDP growth in 2011 and 3.4 percent in 2012 remain intact,” Moody’s Analytics said.
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