Korea's Economy Shrinks 5.6%, Biggest in 11 Years

South Korea's economy shrank a seasonally adjusted 5.6 percent in the fourth quarter from the previous three months, far more than expected and the biggest fall in nearly 11 years, the central bank said on Thursday.

The quarterly decline was the sharpest since a 7.8 percent contraction in the first quarter of 1998, when the nation was hit by the Asian financial crisis, reflecting the local impact of a deepening global recession.

A Reuters poll of 12 economists had forecast gross domestic would contract 2.7 percent during the October-December period from the previous quarter.

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The fall compared with a 0.5 percent rise in the third quarter and 0.8 percent growth in the second quarter.

From a year earlier, Asia's fourth-largest economy shrank 3.4 percent, more than the 0.7 percent slump forecast in the poll.

That compared with a 3.8 percent annual rise in the previous quarter and 4.8 percent expansion in the second quarter.

For the full year of 2008, the economy grew 2.5 percent, compared with the central bank's projection in December of 3.7 percent.

Reuters poll showed annual growth is expected to slide rapidly to 1.2 percent this year, which would be the worst annual performance since the 1997-98 Asian financial crisis.

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