Revised gross domestic product data released Friday confirmed that South Korea’s economic growth rate slipped from a five-year high in the fourth quarter as a surge in property transactions faded in the final three months of 2015.
GDP rose 0.7 percent in the fourth quarter from the previous three months, when it jumped by 1.2 percent, according to data released by the Bank of Korea. The economy expanded 2.6 percent in 2015 from a year earlier, the slowest pace since 2012.
The pace of growth is a challenge to policy makers that reflects weakness in domestic demand and a downturn in exports. While the central bank and the government both project that the economy will expand at least 3 percent this year, economists surveyed by Bloomberg estimate just 2.6 percent.
“Last year’s growth was affected a lot by slowing exports,” Jeon Seung Cheol, a director general at the BOK, said in Friday’s briefing. “The government implemented policies to support domestic demand and counter external shocks, but exports still weighed on growth.”
Construction investment fell 2.4 percent during the October-December period from the previous quarter, according to Friday’s data. This, while better than the initial estimate, was the biggest factor to drag down fourth-quarter growth. Private consumption expanded at 1.4 percent and government spending was up 1 percent, while exports rose 2.1 percent by volume.
Housing Pace Slows
While housing transactions in 2015 surged to a record 1.19 million units, the pace slowed in the fourth quarter. Transactions fell 10 percent in December from the previous month, data by the land ministry show.
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For 2015, domestic demand added 3.6 percentage points to growth while net exports cut 1.1 percentage points, BOK’s Jeon said.
The economy’s rebound in the third quarter came as an outbreak of the Middle East Respiratory Syndrome in Korea faded as shoppers returned and the government introduced temporary consumption tax cuts and an extra budget.
Per-capita income for 2015 rose 4.6 percent from a year earlier to 30.9 million won, Friday data showed. In dollars, it fell 2.6 percent to $27,340.
(Updates with BOK official’s comment in fourth paragraph.)
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