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Thursday, July 24, 2014, 10:17

S Korea offers US$11b in stimulus as growth dips

By Reuters

 S Korea offers US$11b in stimulus as growth dips
Awoman walks by sale signs at Seoul shopping district, South Korea, July 24, 2014. (Photo / AFP)

SEOUL, July 24 - South Korea offered billions of dollars in stimulus spending and property market-boosting steps on Thursday to shore up demand after reporting its weakest economic growth in more than a year.

South Korea's economic growth has hit its lowest level in three quarters.

The Bank of Korea said Thursday that growth in Asia's fourth-largest economy slowed to 3.6 percent during the April-June period over a year earlier, after expanding 3.9 percent during the first quarter.

From the previous quarter, it expanded 0.6 percent, the slowest pace in more than a year.

Exports in Asia's fourth-largest economy have benefited less than expected from a pick-up in the global economy this year, but domestic demand has been fragile since a mid-April ferry accident hit tourism and its services industry.

The government rolled out an additional (US$11.4 billion) in spending and 26 trillion won of loans or other financial support, and loosened mortgage borrowing restrictions.

The central bank separately offered banks up to 3 trillion won to encourage them to expand lending at low interest rates to companies that build factories in the country or buy machinery.

President Park Geun-hye has called for all-out efforts to boost the economy and Finance Minister Choi Kyung-hwan promised to take massive action.

The finance ministry said the stimulus spending would lift this year's economic growth by 0.1 percentage point, but economists said indirect effects such as a potential revival of home prices could help spur household income.

The Bank of Korea data showed private consumption fell a seasonally adjusted 0.3 percent in the second quarter after edging up 0.2 percent in the January-March period. Capital investment rose 1.3 percent after a 1.9 percent decline.

 

 
 
 
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