South Korea’s economic growth slowed to a three-year low last quarter as private investment fell sharply, outweighing an increase in spending by the government and households.
The Bank of Korea said yesterday that Asia’s fourth-largest economy expanded 1.6 percent over a year earlier in the three months ended Sept. 30. The economy inched up 0.2 percent from the previous quarter.
The growth was the lowest since a 1 percent expansion in the third quarter of 2009 when South Korea started to recover from the worldwide financial crisis.
Export-reliant South Korea is pinning its hopes for improved growth on demand from emerging markets as the US economy remains sluggish and Europe is mired in a debt crisis.
A decline in corporate investment wiped out a small increase in private consumption and an uptick in exports. Government spending kept the growth rate from slowing even more.
Corporations scaled back investments in facilities for two quarters in a row, underlining that many businesses are still not confident enough to spend because of uncertainty about the economic outlook.
Manufacturing output declined in the quarter due to a fall in auto production.
The Bank of Korea slashed its key policy rate by a quarter of a percentage point earlier this month to 2.75 percent, its second rate cut this year.
The bank also cut its forecast of South Korea’s growth this year to 2.4 percent from 3.0 percent.