SEOUL, South Korea – South Korea's economy grew at its slowest pace in more than a year in the fourth quarter due to reduced government spending.
The Bank of Korea said Friday that Asia's fourth-largest economy expanded 2.7 percent from a year earlier in the October-December quarter.
That was the slowest quarterly expansion in six quarters. But growth of 3.3 percent for the full year was the highest in three years, even though it fell short of expectations.
The weak fourth-quarter results were widely expected after Bank of Korea last week downgraded the country's 2015 outlook citing weakness at the end of 2014.
Governor Lee Ju-yeol said last week that the weak performance was due to the unexpected factors such as insufficient tax revenues that dented government spending and sluggish mobile phone sales after a revised law on mobile subsidies went into effect.
But the central banker said the recovery will be stronger this year, with quarterly growth expected to be about 1 percent each quarter.
The preliminary data showed that South Korea suffered a big drop in construction investment during the final quarter of 2014. Exports dropped marginally due to reduced shipments of LCD screens and ships. Government spending and consumption rose at a slower pace than the previous quarter.
From the third quarter, South Korea's economy expanded just 0.4 percent, the slowest rate in more than two years. The third quarter growth rate was 0.9 percent.
South Korea's central bank cut key interest rates two times last year to boost consumer spending and capital investment.