S Korean economy hit by crisis in euro area

SEOUL - Agence Frence-Presse

A woman walks past a sign at a shopping district in Seoul on Jan. 26. South Korea’s economy grew at its slowest pace in two years in the final quarter of 2011. AFP photo

South Korea’s economy grew at its slowest pace for two years in the final quarter of last year as Europe’s debt crisis took its toll on exports and consumer spending, the central bank yesterday.

Gross domestic product (GDP) in October-December rose 0.4 percent from the previous quarter, compared to a 0.8 percent rise in the third quarter.

It was the lowest quarter-on-quarter increase since 0.2 percent in October-December 2009.

Year-on-year GDP grew 3.4 percent in the fourth quarter of 2011 compared to 3.5 percent in July-September.

The performance was below market expectations and the central bank’s earlier estimates.

A poll of nine economists by Dow Jones Newswires forecast a 0.5 percent quarter-on-quarter rise and a 3.5 percent year-on-year expansion.

The central Bank of Korea last month tipped Asia’s fourth largest economy to grow 1.0 percent quarter-on-quarter and 4.0 percent year-on-year.

However its governor Kim Choong-Soo cautioned early this month that the actual fourth-quarter figures would fall short of the December forecast.

“Amid sluggish domestic demand, exports turned negative,” senior central bank official Kim Young-Bae told reporters yesterday.

“The sovereign debt crisis in Europe had a larger than expected impact on facility investment and private consumption.”

Exports, accounting for about half of GDP, declined 1.5 percent quarter-on-quarter in October-December after expanding 2.2 percent in the three months earlier.