S. Korea's economic growth slows to 4.6 percent in Q3 : central bank

South Korea's economy grew 4.6 percent in the third quarter from a year earlier, slowing from a 5.3-percent rise the previous quarter, the smallest gain in a year, largely due to slowing private spending, the country's central bank said Wednesday.

Gross domestic product (GDP) in Asia's fourth-largest economy expanded 0.9 percent in the July-September period, compared with a 0.8-percent quarterly gain three months earlier, according to an initial estimate by the Bank of Korea.

GDP, the broadest measure of an economy's performance, is the total value of goods and services produced within the economy in a given period.

The third-quarter annual gain was roughly in line with the median forecast of 4.57 percent in a poll of 14 financial institutions and think tanks by Yonhap Infomax, the financial news arm of Yonhap News Agency.

"The economy will be able to achieve about 5 percent economic growth for the year," said Lee Kwang-ju, director of the central bank's economic statistics division.

He said the economy is forecast to grow a seasonally adjusted 0.8 percent in the fourth quarter from the third.

"Private spending recovery will continue into the fourth quarter as well," Lee said.

South Korea's economy is expected to expand at above 5 percent this year on the back of a recovery in private spending and resilient exports.

But high oil prices and a firmer won versus the U.S. dollar are causing worries that the economic growth may slow down.

Also, signs of slowing growth in the U.S. and Asia may reduce demand for South Korean goods, curbing the economy in coming quarters.

For next year, the economy is forecast to expand at a mid-4-percent pace.

The central bank froze its key interest rate at 4.5 percent for October citing an economic slowdown.

"The data confirmed the economy is facing a slowdown... but the pace will not be as steep as some were concerned," said Lee Sang-jae, an economist at Hyundai Securities.

The economy is also feared to experience a further slowdown due to North Korea's recent nuclear test. Lee Seong-tae, the central bank's chief, said Monday that growing tension caused by North Korea's nuclear test may discourage consumers and companies from spending next year, as well as hurt foreign investment.

The central bank said private spending increased 0.5 percent in the third quarter from the previous quarter, the smallest gain in six quarters, compared to a 0.9 percent gain the previous quarter.

Manufacturing increased 2.2 percent in the third quarter from the previous quarter, higher than the 1.6 percent quarterly rise the previous quarter.

Corporate facility investment rose 3.1 percent in the July-September period, accelerating from a 2.5-percent rise the previous quarter, according to the central bank.

Construction investment also rose 2.3 percent quarter-on-quarter, shifting from a 3.9-percent quarterly drop in the previous quarter.

Goods exports increased 2.6 percent in the third quarter from the previous quarter, slowing from a 6.2-percent gain in the preceding three-month period, the bank said.

The Finance Ministry also said the third-quarter growth matched its own forecast, but the economy is facing growing downside risks.

"It is true that the economy is facing increased downside risks that stem from North Korea's atomic bomb test... but we have to wait to see how much impact the incident will have on the economy," said Cho Won-dong, director general of the Finance Ministry's economic policy division.

Meanwhile, private economists said the economy is growing at its potential on the back of resilient exports.

But there are various uncertainties including North Korea's nuclear issue, they were quoted as saying during a meeting with the central bank's chief earlier in the day.

Seoul, Oct. 25 (Yonhap News)