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South Korea revises down its 2008 economic rise to 2.2%

THE Republic of Korea's economy grew less in 2008 than first reported, the central bank said yesterday, as the country fights its worst economic downturn since the Asian financial crisis over a decade ago.

The economy grew a revised 2.2 percent last year, compared with the preliminary 2.5 percent announced in January, according to the Bank of Korea.

Overall economic growth in 2008 was hit hard by the onset of the global financial crisis and ensuing slowdown. South Korea's economy grew 5.1 percent in 2007.

Exports and industrial production have both plummeted. The government and private economists forecast that Asia's fourth-largest economy will report an annual decline in 2009 for the first time since 1998.

The government has responded to the slump by offering stimulus programs, including a 28.9-trillion-won (US$21.7 billion) supplementary budget announced Tuesday.

The Bank of Korea, meanwhile, has slashed its benchmark interest rate six times since October to a record low 2 percent, though it was left unchanged at the most recent policy meeting this month.

4th-quarter contraction

The central bank did not revise its January estimate of a 3.4-percent contraction in the fourth quarter of last year. That was the first shrinkage from the previous year in a decade.

Compared with the third quarter, the economy shrank a revised 5.1 percent in the three months ended December 31, less than the initially reported contraction of 5.6 percent.

The revisions were due largely to a technical factor - the bank changed the base year at which it calculates growth from 2000 to 2005, said spokesman Kim Seong.

The bank adopted a new method of calculation in line with suggestions by the Organization for Economic Cooperation and Development and the International Monetary Fund.


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