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S. Korea growth slows as ferry tragedy hits demand

AFP

South Korea's economy posts its slowest growth in more than a year in the second quarter, partly due to sluggish consumer spendingSouth Korea's economy posts its slowest growth in more than a year in the second quarter, partly due to sluggish consumer spending

South Korea's economy posts its slowest growth in more than a year in the second quarter, partly due to sluggish consumer spendingSouth Korea's economy posts its slowest growth in more than a year in the second quarter, partly due to sluggish consumer spending

South Korea's economy posted its slowest growth in more than a year in the second quarter, partly due to sluggish consumer spending following April's devastating ferry tragedy.

Gross domestic product rose a seasonally adjusted 0.6 percent in the April-June period from the previous quarter, the central Bank of Korea said.

It was the slowest growth since the first quarter of 2013 and missed market expectations of around 0.7 percent.

Year-on-year, Asia's fourth largest economy expanded 3.6 percent, down from the previous quarter's 3.9 percent.

South Korea's export-reliant economy was hit badly by slow demand in the wake of the global recession, with the growth rate plunging to 0.7 percent in 2009 compared to 2.8 percent in 2008.

But it has picked up in recent years, expanding 2.3 percent in 2012 and 3.0 percent in 2013.

The central bank had initially forecast growth of 4.0 percent in 2014, but earlier this month revised the figure down to 3.8 percent.

The bank said that while exports had held strong, domestic demand had slacked off after the Sewol ferry disaster.

The Sewol sank on April 16 with the loss of around 300 lives, triggering an extended period of national mourning.

The finance ministry plans to announce an economic stimulus package later Thursday and there are signals that the Bank of Korea may consider an interest rate cut in August.

The bank held its key interest rate steady at 2.5 percent for the 14th-straight month in July.

Date created : 2014-07-24