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GDP-2012 revision

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(Globalpost/GlobalPost)

By Kim Soo-yeon

SEOUL, March 26 (Yonhap) -- The South Korean economy grew at the slowest clip in three years in 2012 as exports and facility investment remained weak amid the global economic slowdown, the central bank said Tuesday.

The country's gross domestic product, the broadest measure of economic performance, grew 2 percent in 2012, unchanged from its earlier projection made in January, according to the Bank of Korea (BOK).

The 2012 growth marked the slowest increase in three years. The 2011 growth was revised up to 3.7 percent from an earlier estimate of 3.6 percent.

The growth data underscores economic headwinds facing South Korea, which is suffering from sluggish domestic demand and weak exports amid the global economic slowdown. The BOK's 2013 growth estimate stood at 2.8 percent.

The quarterly growth numbers were all revised down, except for the second quarter reading. Asia's fourth-largest economy grew 0.3 percent on-quarter in the fourth quarter, after posting no growth in the preceding quarter.

The GDP data comes at a delicate time, when there are mixed outlooks over whether the BOK will cut the key interest rate to 2.5 percent in April. The bank froze the benchmark rate at 2.75 percent for the fifth straight month in March after cutting it in July and October of last year.

New Finance Minister Hyun Oh-seok and BOK Gov. Kim Choong-soo recently made slightly different assessments of economic conditions.

The government is poised to unveil a package of stimulus measures, which may include 10 trillion won in extra budget plans, in a bid to prop up growth. The minister stressed the importance of policy mix, saying that the local economy is in "serious" condition.

Gov. Kim also emphasized establishing harmony between fiscal and monetary policies, but his assessment of economic activities is slightly brighter than that of the finance minister. The governor even expressed concerns about a long streak of low rates, spawning speculation that a rate cut may not be in the cards.

Exports, which account for about 50 percent of the economy, grew 4.2 percent in 2012, slowing from a 9.1 percent gain in the previous year. The 2012 reading marked the weakest gain since 2009 when Korea was in the midst of the 2008 global financial crisis.

Private spending, rose 1.7 percent last year after growing 2.4 percent in 2011 as high household debt crimped consumers' spending.

Facility investment contracted 1.9 percent in 2012 after growing a revised 3.6 percent in the previous year. The 2012 data was the worst performance since 2009 as economic uncertainty prompted more firms to refrain from spending on capital investment.

Construction investment declined 2.2 percent, smaller than a 4.7 percent fall in 2011.

Meanwhile, the gross national income (GNI), a gauge of purchasing power of the population, rose 2.6 percent on-year in 2012, the BOK said. Korea's per capita GNI stood at US$22,708 last year, up from $22,451 in 2011, the central bank added.

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