Korea's economic growth hits over 3-year low in 3rd quarter

The Korean economy grew at the slowest pace in more than three years in the third quarter as facility investment faltered amid the global economic slowdown, the central bank said Thursday.

South Korea's gross domestic product (GDP), the broadest measure of economic performance, grew a revised 0.1 percent in the July-September period from three months earlier, down from a previous estimate of 0.2 percent, according to the Bank of Korea (BOK).

The third-quarter growth marked the slowest gain since the first quarter of 2009 when Korea was in the midst of the 2008 global financial crisis. It also slowed from a 0.3 percent on-quarter gain in the second quarter.

The BOK said earlier that the quarterly growth is likely to pick up in the fourth quarter, but the growth pace would stay below 1 percent every quarter until the first half of next year.

The country's GDP grew a revised 1.5 percent from a year earlier in the third quarter, the slowest expansion since a 1 percent on-year gain in the third quarter of 2009.

Asia's fourth-largest economy almost did not grow in the third quarter from three months ago, raising expectations that the economy may miss the BOK's full-year forecast of 2.4 percent, analysts say. Last month, the Organization for Economic Cooperation and Development (OECD) cut its 2012 growth estimate for Korea to 2.2 percent.

Recent data on exports and factory output show some improvements, but the growth outlook still remains murky as the global economy slows down amid the protracted eurozone debt crisis.

More analysts bet on an additional rate cut in the first half of next year as the new government to be launched in late February will likely pump up efforts to revitalize the economy. The BOK cut the key interest rate in July and October.

"The Korean economy may have bottomed out in the third quarter, but the recovery pace is widely expected to be very moderate down the road," said Lee Sung-kwon, a senior economist at Shinhan Investment Corp. "A rate cut is widely anticipated in the second quarter of next year."

Exports, which account for about 50 percent out of the economy, grew 2.8 percent on-quarter in the third quarter, better than its earlier estimate of 2.5 percent, according to the BOK.

Private spending rose 0.7 percent last quarter, compared with a previous estimate of 0.6 percent.

Facility investment fell 4.8 percent, worse than its previous projection of a 4.3 percent contraction and construction investment grew 0.1 percent, lower than a 0.2 percent gain previously estimated.

Korea's domestic demand remains subdued as high household debt curbs consumer spending and companies are delaying making big capital investment due to economic uncertainty while hoarding cash. (Yonhap)