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South Korea posts slowest annual GDP growth since financial crisis
[SEOUL] South Korea's government spending surge helped the economy post its fastest growth in more than two years in the fourth quarter but sagging exports and global trade tensions pulled the annual reading to its lowest level since 2009.
The annual slowdown comes as President Moon Jae In's administration is set to sharply boost fiscal spending this year and as the Bank of Korea mulls further stimulus to shield the economy from the global slowdown.
Gross domestic product increased by a seasonally adjusted 1.2 per cent in the fourth quarter from three months earlier, the BOK said on Wednesday, the fastest expansion since the third quarter of 2017 and outperforming the median estimate of 0.8 per cent in a Reuters survey.
Robust government spending on public infrastructure combined with better private consumption improved growth in the quarter, but that did little to help exports, which made no contribution to the 1.2 per cent expansion.
In the fourth quarter, private consumption increased 0.7 per cent from three months earlier while construction investment jumped 6.3 per cent.
Exports declined 0.1 per cent in volume terms, reflecting the extended slump in shipments, which declined for a 13th consecutive month through December in year-on-year terms.
For the whole of 2019, the economy grew 2.0 per cent, the slowest pace in 10 years and matching the central bank's projection.
"Of the 2 per cent, the net government contribution to growth came to 1.5 percentage points, the biggest portion since 2009 but that didn't change the fact that it was a hard year for Korea in terms of exports," a central bank official said.