South Korea’s economic growth slows in first quarter

Seoul / AFP

An extended export slump and weakening domestic consumption saw South Korea’s economic growth slow in the first quarter, despite record low interest rates, the central Bank of Korea said.
Asia’s fourth largest economy expanded 0.4 percent in the January-March period from the previous quarter, and 2.7 percent compared to a year earlier.On-quarter growth in the final three months of last year had stood at 0.7 percent.
Exports, which account for nearly half of the South Korean economy, have been in decline for 15 straight months, while household debt has spiralled, hitting about $1 trillion at the end of December.
Last week, the central bank cut its growth outlook for 2016 to 2.8 percent, but kept interest rates on hold saying it expected to see a modest pick-up in the second quarter.
The bank’s key interest rate has remained unchanged at a record low 1.5 percent since June.
BoK Governor Lee Ju-Yeol said growth uncertainties “still remain large”, although the economy was expected to show a moderate recovery from April-June.
Facilities investment fell 5.9 percent from the previous quarter, according to Tuesday’s data, while exports dropped 1.7 percent and private consumption decreased 0.3 percent.