Seoul posts 8.8% GDP growth rate for 2000

Seoul posts 8.8% GDP growth rate for 2000

SEOUL (AFP): South Korea's economy grew 8.8 percent in 2000 despite a marked slowdown in the fourth quarter, the central Bank of Korea (BoK) said Tuesday.

The increase in Gross Domestic Product (GDP) last year was down from a rate of 10.9 percent the previous year. Some analysts said the 2000 GDP growth was slightly lower than expected.

The BoK figures showed a sharp fall in growth from the fourth quarter, when the GDP grew 4.6 percent year-on-year, down from 9.2 percent year-on-year the previous quarter.

"The economy appears to have hit a peak in the third quarter and began its downturn in the fourth quarter," BoK Director General Chung Jung-Ho said.

"But the economy is expected to bounce back from the second half of this year, if overseas factors do not further deteriorate," he said.

He said stability had returned to international oil prices and that the price of semiconductors, South Korea's key exports, appeared to have hit a bottom.

In its last forecast made in December, the BoK predicted GDP growth would be 5.3 percent this year.

The information technology industry served as a locomotive for the economic growth, accounting for 15.3 percent of total GDP in 2000, up from 12.2 percent the previous year.

Exports were largely driving the economy, contributing around 63.4 percent to the economic growth, while domestic consumption accounted for 36.6 percent of the expansion.

The per-capita Gross National Income, an average income for every South Korean, grew 12.6 percent to $9,628.

Samsung Economic Research Institute chief researcher Hwang In- Sung said first quarter GDP this year was expected to post a 2.5 percent year-on-year growth.

"The economy seems to be approaching a bottom... I expect a turning point as early as in the second quarter or in the second half," he said, citing signs of improvement in consumer and business confidence.

For the whole of 2001 the Samsung institute expects a 4.5 percent growth in GDP, below the BoK's forecast of 5.3 percent.

Hwang said a difficult time would lie ahead for exports because of a slowdown in the U.S. economy, a weak Japanese yen and volatile foreign exchange rates.

Daishin Economic Research Institute senior economist Kwon Hyeuk-Boo drew a gloomier picture of the year's economic prospects.

"Our earlier GDP growth forecast for this year was around 4.0 percent but recent developments in the US and Japanese economies may bring it to a lower level than that," he said.

Kwon said the first quarter was expected to grow 3.0 percent year-on-year this year or even less because of a slowdown in investment and consumption.

"If the US economy fails to achieve a soft landing, the recovery in South Korea may not come until next year," he said, noting that the United States is the biggest buyer of South Korea's IT exports.

The economic doldrums in Japan and the weak yen may also be a drag on South Korea's economic rebound. "A weaker yen seems inevitable for a while and it is not good news for local exports," he said.