S. Korean economic growth slows in Q3

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SEOUL, Dec. 2 (Yonhap) -- The South Korean economy expanded slower than earlier
estimated in the third quarter, as exports fell and domestic demand weakened, the
central bank said Tuesday.
The country's gross domestic product (GDP) expanded a revised 0.5 percent
on-quarter in the July-September period, slightly lower than an earlier 0.6
percent estimate, and the weakest since pace since 2004, according to a report by
the Bank of Korea (BOK).
Compared with a year earlier, Asia's fourth-largest economy grew a revised 3.8
percent, also lower than an earlier 3.9 percent estimate, the bank said.
GDP, the broadest measure of an economy's performance, is the total value of
goods and services produced within the economy in a given period.
The central bank said economic growth for the year may fall short of its earlier
estimate of 4.4 percent as the global financial crisis has hit the export-driven
economy harder than expected, further dampening domestic demand.
"South Korea's economy may grow below 3 percent in the fourth quarter, missing
the central bank's earlier growth forecast," Jung Yung-taek, head of the central
bank's national income team, told reporters.
Exports of goods, which account for more than half of the country's GDP, fell 1.9
percent on-quarter, compared with a 4.3-percent on-quarter gain the previous
quarter.
Private spending, one of the main growth engines of the South Korean economy,
edged up 0.1 percent from the preceding quarter.
Facility investment gained 2.1 percent from the previous quarter, according to
the central bank.
South Korea's real gross national income (GNI), reflecting the actual purchasing
power of the population, also dipped 3.7 percent in the third quarter, as terms
of trade worsened amid soaring costs of raw materials. It fell by the biggest
margin since the January-March period of 1998 when GNI dipped 9.6 percent,
according to the bank.
Economists said the weak growth readings could provide room for the central bank
to reduce its key rates at next week's rate-setting meeting.
The central bank lowered its benchmark interest rate to 4 percent earlier last
month, the third reduction in one month and the most aggressive round of easing
in a decade.
The economy is faltering as the global recession undermines overseas sales. South
Korean exports suffered their biggest drop in seven years, a government report
showed on Monday. Shipments to China, the nation's biggest overseas market,
tumbled 27.8 percent.
South Korea is pumping funds into its financial system, cutting taxes, boosting
public spending and slashing interest rates to support the economy.
"The figures show that the economic slump is accelerating at a faster than
expected pace," said Kwon Sun-woo, a researcher at Samsung Economic Research
Institute. "More steps to boost the economy should be taken."
A slew of foreign investors such as UBS AG and Macquarie Securities are
forecasting that the South Korean economy will contract next year due to slumping
exports and weak private spending.
Meanwhile, a government official said earlier in the day the economy may turn
around in the second half of next year.
"Our economy, after bottoming out in the first half of next year, is expected to
improve in the second half as global economic conditions turn around," Deputy
Finance Minister Noh Dae-lae said in a radio interview.
sam@yna.co.kr
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