The South Korean economy expanded at the slowest pace in more than two years in the fourth quarter, central bank data showed Friday, raising concerns over faltering growth.
Asia’s fourth-largest economy grew 0.4 percent during the October-December period, sharply decelerating from the 0.9 percent on-quarter growth in the July-September period, according to the Bank of Korea. The figures are seasonally adjusted.
The fourth-quarter expansion marks the lowest on a quarterly basis since the 0.4 percent gain in the third quarter of 2012.
The central bank attributed the lackluster growth mainly to flagging exports.
Exports of goods slipped 0.6 percent in the fourth quater from three months earlier, falling for a second straight quarter, according to the central bank. Exports are the country’s key driving force for growth.
“But with slowing shipments to China, which accounts for roughly 26 percent of all exports, overall growth was sluggish,” said Jung Yung-taek, the director general of the BOK’s economic statistics division.
Jung said the central bank is closely monitoring as key industries, with the exception of semiconductors, are “being quite challenged.”
The figure is in line with an earlier estimate by BOK Gov. Lee Ju-yeol. He estimated growth to have slowed down in the fourth quarter, citing “exceptional” factors, such as “a significant fall in consumption expenditures of telecommunications products, as well as a fall in infrastructure investment due to insufficient tax revenue.”
The BOK’s Jung, however, said while the impact of a tightened mobile subsidy law was significant in October, the size of its impact was not as big as expected and is seen to have recovered to a normal level.
From a year earlier, Asia’s fourth-largest economy expanded 2.7 percent in the three-month period, marking the slowest growth since the second quarter of 2013.
On an annual basis, the gross domestic product increased 3.3 percent on-year, picking up from a 3 percent growth posted in 2013. The figure is slightly lower than the central bank’s growth forecast of 3.4 percent for this year.
By sector, private spending rose 0.5 percent on-quarter during the October-December period, slowing from a 1 percent growth three months earlier.
Government spending growth slowed to 0.5 percent, compared with a 2.3 percent increase in the third quarter. Construction investment dropped 9.2 percent on-quarter as government spending waned.
Exports, the country’s key growth engine, slipped 0.3 percent on-quarter, shrinking for a second straight quarter. Imports also fell for a second consecutive quarter to 0.6 percent as oil prices continued to slide.
The data comes roughly a week after the central bank’s sharp downward revision of its growth outlook spurred worries over the course of the South Korean economy.
The BOK governor said, however, the move does not reflect pessimism in its outlook for the economy.
“I do realize that some took it as a mild surprise that we had undertaken a downward revision,” he said in a Jan. 22 press briefing. “Let me reiterate that this is because of the exceptional factors in the fourth quarter of last year, and we do not have a pessimistic or grim view of the Korean economic outlook for this year,” said Lee, forecasting that the economy will post a 1 percent quarter-on-quarter growth this year.
Analysts said improvements are unlikely until the second half.
“There are many downside risk factors in the first half as exports are expected to further worsen. Perhaps, the figures will be met in the second half when falling oil prices will start to have positive effects,” said Lee Seung-hoon, an economist at Samsung Securities. (Yonhap)
