South Korea’s economy grew 2 percent last year, its weakest performance in three years, and is not expected to rebound strongly this year, the central bank said yesterday.
The Bank of Korea blamed weak growth on a drop in corporate investment and lackluster exports, which offset the government’s increased spending on construction projects and welfare. Government spending contributed 0.6 percentage points to last year’s growth rate.
South Korea’s economy, Asia’s fourth-largest, is forecast to improve only modestly this year because demand for exports has been sapped by Europe’s debt crisis and an uncertain recovery in the US. The central bank earlier this month downgraded growth forecast for this year to 2.8 percent from the 3.2 percent it forecast in October.
For the final three months of last year, the economy grew 0.4 percent from the previous quarter. That was better than 0.1 percent growth in the July-September quarter because of a modest rise in consumer spending.