Business

South Korea's growth rate hits three-year low

Media playback is unsupported on your device
Media captionSouth Korea's new President Park Geun-hye has promised to do more for mid-sized companies

South Korea's growth rate has hit a three-year low, hurt by a slowdown in exports and corporate investment.

The economy grew by 2% in 2012, the central bank's initial estimates showed. That is down from 3.6% in 2011.

South Korea's exports, which account for almost half of its overall output, have been hurt by a slowdown in key markets such as the US and eurozone.

Meanwhile, policymakers have found it tough to boost domestic demand to offset the decline in foreign sales.

The weak data is likely to put further pressure on South Korea's new government and its central bank, the Bank of Korea, to take further measures to help spur growth.

"Growth this year for South Korea depends on what policies the new administration comes up with," said Park Hyung-Jung an economist with Meritz Securities.

He added that the government needs to act strongly to support the economy and also called upon the central bank to cut its interest rates.

Mr Park warned that if such measures are not taken, it will be difficult for the central bank to meet its 2.8% growth target for the current year.

The central bank has kept the interest rates unchanged since October 2012, when it lowered the key rate to 2.75% from 3%.

Last month, South Korea's finance ministry cut its growth forecast for 2013 from 4.3% to 3% in response to the slowdown in its key export markets.

More on this story