South Korea's 4Q growth slows as construction spending drops

AP News
Posted: Jan 25, 2016 10:17 PM

SEOUL, South Korea (AP) — South Korea's economic growth slowed in the final quarter of 2015 as a drop in construction investment outweighed an improvement in consumer spending, the country's central bank said Tuesday.

Asia's fourth-largest economy expanded 0.6 percent in the fourth quarter from the previous quarter, Bank of Korea's preliminary data showed. It was a slowdown from the 1.3 percent growth in the third quarter.

Construction investment declined 6 percent, offsetting 1.5 percent growth in consumer spending. Exports, which declined in the previous quarter, turned positive in the latest quarter, thanks to higher shipments of chemicals and mobile devices, the bank said.

For the entire year, Asia's fourth-largest economy expanded 2.6 percent, the lowest level since 2.3 percent growth in 2012.

Growth of exports stayed nearly flat in 2015, offsetting improvements in consumer spending. Manufacturing, which is reliant on foreign demand, posted the slowest growth in six years.

The latest figures showed that government's stimulus measures in early 2015 gave only a temporary boost to the economy. China, which is South Korea's largest export market, faced a slowdown and key South Korean exporters, such as shipbuilders and steelmakers, struggled with weak global demand and heightened competition.

South Korea's central bank cut its key policy rates twice in 2015 to a record low of 1.5 percent and the government increased its spending. Such measures gave a boost to the housing market and consumer spending, which led to a big gain in the third-quarter growth.

In 2016, South Korea's economy will likely improve, expanding 3 percent, the bank said earlier this month. Consumer spending will continue to fuel the economic expansion as exports will likely see a slow recovery.


This story was corrected to show South Korea's manufacturing posted the slowest growth in six years, not five years.