S. Korean economy grows 0.7 pct on-quarter in Q3

SEOUL, Oct. 27 (Yonhap) -- The South Korean economy grew at the slowest pace in three quarters in the third quarter on weaker consumer spending and faltering facility investment, the central bank said Thursday, showing that growth momentum cooled amid a global economic slowdown.

Asia's fourth-largest economy grew 0.7 percent in the July-September period, slowing from a 0.9 percent on-quarter expansion tallied in the second quarter, according to an advance estimate by the Bank of Korea (BOK). The country's gross domestic product (GDP), the broadest measure of economic performance, rose 3.4 percent last quarter from a year ago.

The third-quarter growth marked the slowest expansion since a 0.5 percent expansion in the fourth quarter of last year and was sharply lower than 1.5 percent on-quarter growth previously estimated by the central bank.

The data came as a slowing global economy and the eurozone debt crisis are upping economic uncertainty, raising concerns that the export-dependent Korean economy would be inevitably hurt by the global slowdown.

BOK Gov. Kim Choong-soo said that the country's 2011 growth is likely to miss the central bank's earlier forecast of 4.3 percent.

He also cut the growth outlook for next year, adding that the local economy may grow at the low-4 percent range, slowing from the bank's earlier estimate of 4.6 percent.

The growth data lent support to the view that the BOK's tightening cycle would be gradual in order not to hurt growth.

The BOK froze the key rate at 3.25 percent for the fourth straight month in October as global economic risks heightened and inflation growth moderated.

Despite a pledge by the governor to keep the tightening bias, many analysts forecast that the benchmark rate would likely be held steady at least for the remainder of this year.

According to the central bank, exports, which account for about 50 percent of South Korea's GDP, gained 2 percent on-quarter in the third quarter after expanding 1.2 percent three months earlier.

Private spending, one of the main growth engines of the Korean economy, expanded 0.6 percent, slowing from a 0.9 percent gain in the preceding quarter.

Facility investment contracted 0.4 percent after growing 3.9 percent in the preceding quarter, and construction investment grew 2.2 percent after rising 1.6 percent in the second quarter.