News Room - Business/Economics

Posted on 24 Oct 2008

South Korean economy grows 3.9% in third quarter

South Korea's economy slowed in the third quarter, the central bank said Friday, as growth in exports, manufacturing and services weakened while construction contracted.

 

The Bank of Korea announced that gross domestic product grew 3.9 percent in the three months ended Sept. 30 compared with the same period a year earlier.

 

South Korea, Asian's fourth-largest economy, reported growth of 4.8 percent in the second quarter.

 

The slowdown comes as South Korea's export-oriented economy battles a slumping stock market and currency amid the global financial crisis.

 

The government and central bank have been forced to shore up the banking system and construction sector.

 

Manufacturing and export growth slowed "mainly due to the sluggishness in cars, semiconductors and computers,'' the bank said in a statement.

 

The central bank also said the economy expanded 0.6 percent in the third quarter from the second.

 

That compared with 0.8 percent growth in the second quarter.

 

Citibank Korea economist Oh Suk-tae said the third quarter's 0.6 percent figure equated to an expansion of 2.3 percent on an annualized basis.

 

The Bank of Korea does not release an annualized figure.

 

"Everything is bad,'' Oh said of the announcement.

 

"The weakness in exports and (the) manufacturing sector clearly shows the impact of the global economic slowdown.''

 

Oh said the 3.9 percent growth figure was the worst since the second quarter of 2005. South Korea's benchmark stock index fell 2.7 percent in early trading Friday to 1,021.29.

 

The Korea Stock Price Index has now fallen 46 percent so far this year.