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Korea’s Growth Slows in 4th Quarter Amid Political Turmoil

  • GDP grows 0.4% q/q, 2.3% y/y for annual growth of 2.7%
  • Expansion of 0.4% is slowest pace in more than a year
Bloomberg business news

Korea's Economy Expands at Slowest Pace in More Than Year

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South Korea’s economy expanded at the slowest pace in more than a year in the fourth quarter as a political scandal engulfing impeached President Park Geun-hye and conglomerates including Samsung Group hurt consumer confidence and spending. Construction investment fell as the government took steps to curb household debt and property market overheating in some areas.

Growth in Asia’s fourth-biggest economy is under pressure. Park’s fate remains unclear and the Trump administration appears poised to raise global trade barriers. The BOK this month lowered its projection for 2017 growth to 2.5 percent from 2.8 percent, with Governor Lee Ju-yeol citing expectations of weaker consumption. Consumer confidence in January slid for a third month to nearly an eight-year low. A silver lining for Korea is that with a debt-to-GDP ratio of about 40 percent, the country has room for more fiscal spending, which the central bank and some law makers are advocating. The BOK, with its key rate at 1.25 percent, can also cut further if needed.