South Korea's economy in April-June grew at its slowest quarter-on-quarter rate for over a year, hindered by weakness in the construction sector and reduced farm output, the central bank said Friday.
The Bank of Korea said gross domestic product (GDP) grew 0.8 percent quarter-on-quarter - the lowest rate since 0.5 percent in the first quarter of 2005. In the first three months of this year, GDP grew 1.2 percent.
Year-on-year, GDP grew 5.3 percent in the second quarter, down from 6.1 percent in the first quarter. The overall figures are the same as the bank's estimate in July although there were slight adjustments in some sectors.
The central bank maintained its 4.4 percent year-on-year growth forecast for the second half and five percent for the full year.
Finance and Economy Minister Kwon O-Kyu also maintained the government's projection of five percent growth for 2006, saying weak July economic data were hit by one-off factors such as labour disruptions in the auto industry and flood damage.
He rejected forecasts by some private institutes that the economy had peaked.
"It may be too hasty to (conclude) that the Korean economy is losing steam," he said, adding indicators such as exports and department store sales have been robust since July, rebounding to their June levels. Kwon acknowledged that high oil prices are adding instability to the economy but said their impact would not be "major."
The economy will remain on a stable track if construction investment in the public sector, a main dampening factor to growth in the first half, is implemented in the second half, he said.
"Even if oil prices hit the pessimistic forecast of 75 dollars per barrel this year, the impact on annual growth is projected to be limited, lowering growth by a mere 0.1 percentage point for the year," he said.
In the three months to June, the agricultural sector contracted 2.2 percent quarter-on-quarter, compared with a 2.2 percent rise in the preceding quarter. The construction industry saw a 2.7 percent quarter-on-quarter decline following a 0.4 percent rise in the first quarter.
But the manufacturing sector grew 1.6 percent quarter-on-quarter against 0.6 percent in January-March, on brisk sales of electronics goods, petrochemical products and industrial machinery.
Exports grew 6.2 percent quarter-on-quarter, outstripping the previous quarter's 2.6 percent, on stronger overseas demand for transportation equipment, machinery and petrochemical products.
The Ministry of Commerce, Industry and Energy said separately that exports in August rose 18.7 percent year-on-year to 27.71 billion dollars, as strong overseas sales of petroleum products, semiconductors and machinery offset weaker car shipments.
It said imports grew 23.1 percent year-on-year to 27.09 billion dollars in August due to high oil imports. This took the trade surplus for the month to 620 million dollars, far below the 1.34 billion dollars posted in August 2005.
Consumer prices rose 2.9 percent year-on-year in August, lifted by flooding the preceding month and a rise in industrial product costs and private service charges, according to the National Statistical Office.