South Korea’s economic growth lagged behind the average of the G20 member countries for four consecutive years, data showed Sunday.
Asia’s fourth-largest economy saw its gross domestic product grow by 3.3 percent in 2014, lower than the G20’s 3.4 percent average, the Organization for Economic Cooperation and Development reported in its quarterly national accounts of GDP.
South Korea’s GDP growth has come short of the G20 average since 2011, when the growth rate reached 3.7 percent, and stayed at 2.3 percent in 2012 and 3.0 percent in 2013. The G20 average, on the other hand, hit 4.1 percent in 2011, 3.0 percent in 2012 and 3.2 percent in 2013.
The unprecedented four-year underperformance has evoked concerns among experts, stirring deflation worries over the national economy, particularly because the country’s growth rate beat the G20 average even in the post-global financial crisis period, from 2006 through 2010.
The country’s growth rate surpassed the G20 average growth from 1999 to 2010 with only two exceptions ― 2003 and 2005.
The downturn complies with the Bank of Korea’s 3.4 percent growth outlook for this year, substantially lower than the Finance Ministry’s 3.8 percent and the International Monetary Fund’s 3.7 percent.
The OECD’s report was released three days after the Bank of Korea cut its key interest rate to a record low of 1.75 percent, down 25 basis points, to prevent deflation, at the risk of household debt further rising.
The rate cut was at least a month sooner than most financial experts expected, since the central bank had already lowered the key rate twice last year.
“The monetary policy committee believes it made an appropriate decision to lower its rate by 0.25 percentage point as it forecast the growth and inflation rates to fall well below initial expectations,” BOK Gov. Lee Ju-yeol said in the press briefing.
With the unexpected rate cut, South Korea became the most recent entrant to the global easing party, joining some 20 economies that are pursuing easy monetary policies to combat low growth and compete for weaker currencies.
By Chung Joo-won (joowonc@heraldcorp.com)
