ID :
42131
Thu, 01/22/2009 - 14:14
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Shortlink :
https://www.oananews.org//node/42131
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S. Korean economy shrinks most in almost 11 years in Q4
By Kim Soo-yeon
SEOUL, Jan. 22 (Yonhap) -- The South Korean economy posted the biggest contraction in almost 11 years in the fourth quarter of 2008 due to faltering exports and sluggish domestic demand, the central bank said Thursday.
The country's real gross domestic product (GDP) shrank 5.6 percent on-quarter in
the October-December period, compared with a 0.5 percent expansion in the third
quarter, according to an advance estimate by the Bank of Korea (BOK).
It marked the worst performance since the first quarter of 1998 when it fell 7.8
percent in the aftermath of the Asian financial crisis.
Asia's fourth-largest economy declined 3.4 percent in the fourth quarter from a
year earlier, compared with a 3.8 percent on-year expansion in the third quarter,
it added. The figure marked the biggest fall since the fourth quarter of 1998
when it contracted 6 percent.
For the whole year of 2008, the Korean economy grew 2.5 percent, sharply down
from a 5 percent expansion in 2007. The BOK predicted that the local economy will
grow a mere 2 percent this year.
GDP, the broadest measure of an economy's performance, is the total value of
goods and services produced by the economy in a given period.
The fourth-quarter economic performance did not match with a median estimate of a
2.5 percent on-quarter fall in a survey of 11 analysts by Yonhap Infomax, the
financial news arm of Yonhap News Agency. The outcome was also worse than an
estimate of a 0.6 percent annual decline.
"The Korean economy is sharply losing steam as slumping demand from the global
recession is severely hurting the country's exports," said Lee Sung-kwon, an
economist at Goodmorning Shinhan Securities Co. "I think the BOK is widely
expected to cut the key rate by a quarter percentage point to 2.25 percent in
February and to slash it to 2 percent until the first half."
The report comes as the South Korean economy is cooling more markedly than
expected since exports, the mainstay of the nation's economic growth, show signs
of a sharp slowdown amid a global recession.
Exports of goods, which account for about 60 percent of South Korea's GDP,
tumbled 11.9 percent on-quarter in the three months ended Dec. 31 after declining
1.9 percent in the third quarter.
Private spending, one of the main growth engines of the Korean economy, fell 4.8
percent, compared with a 0.1 percent gain in the preceding quarter.
Facility investment plunged 16.1 percent, after rising 2.1 percent three months
earlier, and construction investment declined 4 percent after remaining flat in
the third quarter.
Experts said the bleak growth readings are expected to prompt the BOK to continue
its monetary easing next month to kickstart the sputtering economy.
In January, the BOK cut the benchmark seven-day repo rate by half a percentage
point to a record low of 2.5 percent, the fifth reduction in three months. Since
October, the bank has trimmed the rate by a combined 2.75 percentage points.
On Monday, President Lee Myung-bak replaced the finance minister and other key
economic officials in an effort to better cope with the slumping economy and the
financial turbulence.
The government, which is targeting at 3 percent growth this year, has unveiled a
raft of economic stimulus packages such as additional fiscal spending and tax
cuts.
SEOUL, Jan. 22 (Yonhap) -- The South Korean economy posted the biggest contraction in almost 11 years in the fourth quarter of 2008 due to faltering exports and sluggish domestic demand, the central bank said Thursday.
The country's real gross domestic product (GDP) shrank 5.6 percent on-quarter in
the October-December period, compared with a 0.5 percent expansion in the third
quarter, according to an advance estimate by the Bank of Korea (BOK).
It marked the worst performance since the first quarter of 1998 when it fell 7.8
percent in the aftermath of the Asian financial crisis.
Asia's fourth-largest economy declined 3.4 percent in the fourth quarter from a
year earlier, compared with a 3.8 percent on-year expansion in the third quarter,
it added. The figure marked the biggest fall since the fourth quarter of 1998
when it contracted 6 percent.
For the whole year of 2008, the Korean economy grew 2.5 percent, sharply down
from a 5 percent expansion in 2007. The BOK predicted that the local economy will
grow a mere 2 percent this year.
GDP, the broadest measure of an economy's performance, is the total value of
goods and services produced by the economy in a given period.
The fourth-quarter economic performance did not match with a median estimate of a
2.5 percent on-quarter fall in a survey of 11 analysts by Yonhap Infomax, the
financial news arm of Yonhap News Agency. The outcome was also worse than an
estimate of a 0.6 percent annual decline.
"The Korean economy is sharply losing steam as slumping demand from the global
recession is severely hurting the country's exports," said Lee Sung-kwon, an
economist at Goodmorning Shinhan Securities Co. "I think the BOK is widely
expected to cut the key rate by a quarter percentage point to 2.25 percent in
February and to slash it to 2 percent until the first half."
The report comes as the South Korean economy is cooling more markedly than
expected since exports, the mainstay of the nation's economic growth, show signs
of a sharp slowdown amid a global recession.
Exports of goods, which account for about 60 percent of South Korea's GDP,
tumbled 11.9 percent on-quarter in the three months ended Dec. 31 after declining
1.9 percent in the third quarter.
Private spending, one of the main growth engines of the Korean economy, fell 4.8
percent, compared with a 0.1 percent gain in the preceding quarter.
Facility investment plunged 16.1 percent, after rising 2.1 percent three months
earlier, and construction investment declined 4 percent after remaining flat in
the third quarter.
Experts said the bleak growth readings are expected to prompt the BOK to continue
its monetary easing next month to kickstart the sputtering economy.
In January, the BOK cut the benchmark seven-day repo rate by half a percentage
point to a record low of 2.5 percent, the fifth reduction in three months. Since
October, the bank has trimmed the rate by a combined 2.75 percentage points.
On Monday, President Lee Myung-bak replaced the finance minister and other key
economic officials in an effort to better cope with the slumping economy and the
financial turbulence.
The government, which is targeting at 3 percent growth this year, has unveiled a
raft of economic stimulus packages such as additional fiscal spending and tax
cuts.
