South Korea's economic growth more than halves in Q4

SEOUL (AFP) - South Korea's economy registered its slowest growth for more than two years in the fourth quarter, the Bank of Korea said on Friday (Jan 23), underlining recovery concerns despite record low interest rates.

The central bank said Asia's fourth-largest economy grew just 0.4 per cent in the October-December period compared to the third quarter.

It was the slowest expansion since the third quarter of 2012.

The figure was in line with an earlier estimate by BOK governor Lee Ju Yeol, who noted "exceptional" factors affecting growth in the fourth quarter, including falling infrastructure investment and telecom equipment sales.

Exports, which account for about half of the South's economy, slipped 0.3 per cent - the second on-quarter decline in succession.

Gross domestic product for the whole year was up 3.3 per cent from 2013.

Earlier this month, the BOK slashed its 2015 growth forecast from 3.9 per cent to 3.4 per cent, although Mr Lee cautioned against reading too much into the revision.

"This does not mean our economic outlook has become more pessimistic," he told reporters on Thursday.

"The 3.4 per cent growth forecast is largely in line with the country's growth potential," he added.

After two rate cuts last year, the Bank of Korea's benchmark rate is currently at a record-equalling low of 2.0 per cent - a level not seen since 2009-10 when South Korea was struggling to recover from the global financial crisis.

Some analysts have predicted a further reduction of 25 basis points in the coming months to help boost tepid domestic consumption and ease deflation concerns stemming from low oil prices.

But Mr Lee indicated on Thursday that an additional cut was unlikely in the near term.

"We have to wait and see how the effects of the cuts we took last year will pan out," he said.