SEOUL: South Korea's third-quarter economic growth topped initial estimates but domestic demand was weaker, darkening the outlook for the export-dependent economy already contending with slumping global demand, central bank data showed on Tuesday.
The data was followed by a warning by the finance minister of Asia's fourth-largest economy entering a long-lasting slowdown and department stores posting the first annual decline in monthly sales since the 2008-2009 global crisis.
The Asian Development Bank (ADB) also trimmed its growth outlook for South Korea and other Asian economies for this year and 2012 and warned of serious impacts should the euro zone and US economies contract sharply.
The downbeat numbers strengthened expectations that Bank of Korea will keep the policy interest rate unchanged for a sixth consecutive month later this week despite high inflation, and that it will cut its growth forecasts for this year and 2012.
LONG-LASTING SLOWDOWN SEEN
The Bank of Korea revised up quarterly growth for the July-September period to a seasonally adjusted 0.8 percent from the 0.7 percent estimated in late October, and annual growth to 3.5 percent from an estimated 3.4 percent.
But private consumption rose less than initially estimated and construction spending was also revised down.
"The revision is not so significant as to influence markets or change the overall view on the economy, but reinforces the gloomy outlook for next year," said Yum Sang-hoon, fixed-income analyst at SK Securities.
Government spending was stronger than previously estimated while imports grew less than seen before, together more than offsetting downward revisions to private consumption and construction spending, the data showed.
Finance ministry data later showed sales at department stores run by the country's top three operators fell 1.1 percent in November from a year earlier, their first annual decline since February 2009.
Minister Bahk Jae-wan said separately at a scheduled meeting of government officials that the country must get ready to cope with a slowdown that could last for a long time.
In the April-June period, South Korea's economy grew a seasonally adjusted 0.9 percent from the previous quarter and by 3.4 percent over a year earlier.
For the whole year, most analysts expect South Korea's economic growth to fall far short of the central bank's July forecast of 4.3 percent and come below 4 percent, compared with the 6.2 percent set in 2010.
The ADB slashed its forecast for South Korea's 2011 economic growth to 3.7 percent from 4.3 percent in September and for next year to 3.9 percent from 4.3 percent, along with downgrades for the region's other economies.
The Bank of Korea is due to unveil revised economic growth forecasts for this year and next on Friday, a day after it reviews its policy interest rate.
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