Korean economy grew under 1 pct. for 7 straight quarters

The Korean economy grew less than 1 percent in the fourth quarter last year from the third, the first time for the country to record quarter-on-quarter growth of under 1 percent for seven consecutive quarters since the government began announcing growth rates in 1970.

The Bank of Korea had earlier forecast growth in the 3-percent range, but lowered the figure. The central bank also said President-elect Park Geun-hye will see growth in the 2-percent range in her first year in office.

In a Monetary Policy Committee meeting Friday, the bank lowered its outlook for GDP growth for this year from 3.2 percent to 2.8, or 0.2 percentage points lower than the government’s forecast.

Since 1970, Korea has recorded annual growth of 3 percent or less just five times. Excluding last year, the country recorded such low growth when it was hit by oil shocks in the 1970s, the foreign exchange crisis in the late 90s, and the U.S.-led global financial crisis in the late 2000s, and the like.

“This year’s economic growth forecast was lowered due to the worse-than-expected economy in the second half of last year,” said Bank of Korea Gov. Kim Choong-soo. The bank had expected an economic rebound in the latter half of last year with quarter-on-quarter growth of 0.3 percent in the third quarter and 0.8 percent in the fourth.

The pace of economic recovery is expected to speed up in the second half of the year, and growth will recover its potential growth rate of 3.8 percent next year. The benchmark interest rate will remain unchanged this month at 2.75 percent based on the sluggish recovery.

weappon@donga.com