S. Korean economy grows 0.4 pct in Q4

SEOUL, Jan. 26 (Yonhap) -- South Korea's economic growth slowed to 0.4 percent in the fourth quarter of 2011 from three months earlier as Europe's debt crisis affected exports, and private and government spending weakened, the central bank said Thursday. From a year earlier, the country's gross domestic product (GDP), the broadest measure of economic performance, expanded 3.4 percent in the October-December period, according to an advance estimate by the Bank of Korea (BOK). The fourth-quarter economic growth eased from a 0.8 percent on-quarter expansion posted in the third quarter and marked the slowest growth since a 0.2 percent expansion tallied in the fourth quarter of 2009. For the whole year of 2011, Asia's fourth-largest economy expanded 3.6 percent, slowing from 6.2 percent growth in 2010 and also lower than the BOK's earlier estimate of 3.8 percent growth. "Private spending and government spending was worse than expected and exports were weak as well," a BOK official said. Despite still-elevated inflation, the BOK left the key interest rate unchanged at 3.25 percent in January for the seventh straight month, citing heightening risks from Europe's debt crisis and slowing growth in the domestic economy. BOK Gov. Kim Choong-soo said after the Jan. 13 monetary policy meeting that downside risks to growth in the global economy are getting bigger and domestic economic growth will remain subdued for some time due largely to the impact of external risks. Citing that Europe's debt crisis and a global slowdown would hurt exports, the central bank lowered in December its 2012 growth outlook for the South Korean economy to 3.7 percent from an earlier estimate of 4.6 percent. The International Monetary Fund on Tuesday revised down its 2012 growth forecast for the global economy to 3.3 percent from an earlier estimate of 4 percent, as intensifying strains in the euro area threatens the global recovery. It kept the U.S. economy growth forecast this year at 1.8 percent, but said the eurozone economy is expected to go into a mild recession in 2012. South Korea is also bracing to shield its export-dependent economy from external risks as Europe's crisis deepens. The country's finance ministry plans to spend 60 percent of the annual budget during the first six months to stimulate domestic demand with public spending. Exports, which account for about 50 percent of South Korea's GDP, dropped 1.5 percent on-quarter in the fourth quarter after expanding 2.2 percent in the three months earlier. Private spending, one of the main growth engines of the Korean economy, shrank 0.4 percent, compared with a 0.4 percent rise in the previous quarter. Facility investment also contracted 5.2 percent in the fourth quarter, marking a two straight quarterly decline, and construction investment edged down 0.3 percent. (END)