SEOUL: South Korea’s economy grew a slower-than-expected 0.9% in the fourth quarter 2004, data showed yesterday, but rising private consumption suggests growth is more balanced now.
South Korea has recently had to rely primarily on brisk exports to fuel economic expansion, but the government has been pushing hard to boost the domestic economy after a slump in consumption lasting more than two years.
“The quarter-on-quarter growth trend shows our economy is no longer deteriorating,” Kim Byung-hwa, head of the central bank’s statistics department, told a news conference. But it was premature to say domestic demand had fully recovered, he added.
Economists were similarly guarded but generally upbeat.
“The economy is past its worst, clearly. But the consumption recovery should be mild given that households have yet to see their huge debts shaved off and income flows are not very encouraging,” said Lim ji-won, an economist at JP Morgan Chase Bank.
The growth in gross domestic product (GDP) fell short of a median forecast in a Reuters poll for a 1.1% seasonally adjusted rise. But it was the strongest growth since a 2.8% rise in the fourth quarter 2003.
The head of the finance ministry’s economic policy bureau, Lee Seung-woo, said that growth would pick up in the year through the first quarter to more than 4%, from 3.3% in the fourth quarter, helped by recovering domestic demand and resilient exports.
The latest data also showed that GDP rose 4.6% in 2004, accelerating from 3.1% in 2003.
Private consumption in the final quarter of 2004 rose 0.6%, the central bank said, picking up from a revised 0.2% rise in the third quarter. – Reuters