By Cynthia Kim
SEOUL (Reuters) – South Korea’s government spending surge helped the economy post its fastest growth in more than two years in the fourth quarter but sagging exports and global trade tensions pulled the annual reading to its lowest level since 2009.
The annual slowdown comes as President Moon Jae-in’s administration is set to sharply boost fiscal spending this year and as the Bank of Korea mulls further stimulus to shield the economy from the global slowdown.
Gross domestic product increased by a seasonally adjusted 1.2% in the fourth quarter from three months earlier, the BOK said on Wednesday, the fastest expansion since the third quarter of 2017 and outperforming the median estimate of 0.8% in a Reuters survey.
Robust government spending on public infrastructure combined with better private consumption improved growth in the quarter, but that did little to help exports, which made no contribution to the 1.2% expansion.
In the fourth quarter, private consumption increased 0.7% from three months earlier while construction investment jumped 6.3%.
Exports declined 0.1% in volume terms, reflecting the extended slump in shipments, which declined for a 13th consecutive month through December in year-on-year terms.
For the whole of 2019, the economy grew 2.0%, the slowest pace in 10 years and matching the central bank’s projection.
“Of the 2%, the net government contribution to growth came to 1.5 percentage points, the biggest portion since 2009 but that didn’t change the fact that it was a hard year for Korea in terms of exports,” a central bank official said.
(Reporting by Cynthia Kim; Editing by Sam Holmes and Chris Reese)