Bank of Korea cuts 2015 outlook for South Korean economy, cites reduced government spending

SEOUL, South Korea – South Korea's central bank cut its forecast for economic growth this year to 3.4 percent from 3.9 percent predicted in October.

Bank of Korea Governor Lee Ju-yeol did not explain the downgrade but noted Thursday that the fourth quarter of last year was unexpectedly weak.

Lee said lower government spending and a drop in mobile device sales due to new regulations dragged on growth in the final quarter of 2014.

He said the South Korean economy likely expanded 0.4 percent in the fourth quarter from the previous quarter, less than the 1 percent forecast.

Lee said Bank of Korea policymakers left the benchmark interest rate unchanged at 2 percent this month because it is sufficiently low to provide support to economic recovery.