SEOUL, South Korea (AP) — South Korea's economic growth slowed to a three-year low last quarter as private investment fell sharply, outweighing an increase in spending by the government and households.
The Bank of Korea said Friday that Asia's fourth-largest economy expanded 1.6 percent over a year earlier in the three months ended Sept. 30. The economy inched up 0.2 percent from the previous quarter.
The growth was the lowest since a 1 percent expansion in the third quarter of 2009 when South Korea started to recover from the global financial crisis.
Export-reliant South Korea is pinning its hopes for improved growth on demand from emerging markets as the U.S. economy remains sluggish and Europe is mired in a debt crisis.
A decline in corporate investment wiped out a small increase in private consumption and an uptick in exports. Government spending kept the growth rate from slowing even more.
Corporations scaled back investments in facilities for two quarters in a row, underlining that many businesses are still not confident enough to spend because of uncertainty about the economic outlook. Manufacturing output declined in the quarter due to a fall in auto production.
The Bank of Korea slashed its key policy rate by a quarter of a percentage point earlier this month to 2.75 percent, its second rate cut this year.
Governor Kim Choong-soo said policymakers decided to lower borrowing costs to lift economic growth.
The bank also cut its forecast of South Korea's growth this year to 2.4 percent from 3.0 percent.