South Korea’s GDP growth slowed in the fourth quarter, but the central bank yesterday maintained its forecast of a strong expansion this year for Asia’s fourth-largest economy.
GDP in October-December grew 0.2 percent from the previous three months compared with a 3.2 percent gain in the third quarter, the bank said in a statement.
Compared with a year earlier, the economy expanded 6 percent in the fourth quarter, up sharply from 0.9 percent growth in the third quarter.
South Korea recorded full-year growth of 0.2 percent compared with a 2.2 percent rise in 2008.
“Given the strong performance in the two previous quarters, it’s no wonder that the fourth-quarter growth slowed,” Kim Myung-kee, director-general of the central bank’s economic statistics division, told reporters.
“But that’s temporary and we maintain our earlier forecast for this year,” Kim said, calling the fourth-quarter figure a “brief correction.”
For this year the bank forecast growth of 4.6 percent, while the government is predicting 5 percent.
Exports, consumer demand and government spending all fell in the fourth quarter.
Exports dropped 1.8 percent quarter-on-quarter in the October-December period after jumping 5.2 percent in July-September. Government spending fell 2.9 percent compared with a 0.8 percent decline in the previous quarter.
Private spending was down 0.1 percent compared with a 1.5 percent gain in the preceding quarter. Capital investment climbed 4.7 percent after rising 10.4 percent in the third quarter.
The positive growth for last year contrasts with widespread predictions a year ago that the country would record its first annual negative figure since the East Asian economic crisis of 1998.
But South Korea, thanks partly to an aggressive stimulus package and a series of rate cuts, recovered far faster than expected from the global economic slowdown.
The government is vowing to stick to an expansionary policy until the recovery becomes firmer. It says job creation is its top priority.
The central bank this month froze its key rate at a record low of 2 percent for the 11th straight month, when the vice finance minister attended the policy meeting as an observer. It was the first time in more than a decade that the government had exercised its right to attend the meeting, in an apparent attempt to prevent a rate increase in the near term.
“The upswing is not over and will almost certainly pick up speed again in coming quarters,” the research institute Capital Economics said in an e-mailed commentary. “Exports, government spending, and household consumption slipped back quarter-to-quarter but the weakness in all three areas is unlikely to last.”
The economy would get some lift even from the weak recoveries expected in the US and Europe, and China’s upswing would not stall, Capital Economics said.
The public sector was likely to make a contribution in the first half of this year since the budget was being front-loaded and household spending was well placed to climb again, it said.
The firm forecast around 5 percent growth for this year, falling to about 3 percent next year.
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