South Korea's Q4 GDP up 0.6 percent, slightly below expectations

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South Korea's economic growth more than halved to 0.6 percent in the final quarter of 2015 as a decline in construction investment hobbled the ongoing recovery, central bank estimates showed on Tuesday.

Fourth-quarter gross domestic product rose 0.6 percent in seasonally adjusted terms from the third quarter, slowing from a 1.3 percent rise in the September quarter of last year.

This slightly lagged the median forecast of a seasonally adjusted 0.7 percent in a Reuters survey of 20 analysts.

"Growth last year was not terrible thanks to consumption, but this year the recovery faces downside risks because the Chinese economy is worsening while government stimulus measures are unlikely to be bigger than last year," said Park Jung-woo, an economist Korea Investment and Securities.

From a year earlier, the economy expanded 3.0 percent in the December quarter, which matched the median forecast in the Reuters poll and posted the fastest annual growth since the third quarter of 2014.

Demand for services and durable goods drove private consumption up by a seasonally adjusted 1.5 percent in the fourth quarter, following 1.2 percent growth in the previous quarter to post the best quarterly rise since the December quarter of 2009.

Meanwhile, the central bank data showed construction investment dropped 6.1 percent in October-December from the previous quarter, which was the biggest decline since a 7.8 percent fall in the fourth quarter of 2014.

Low construction investment alone contributed to a 0.9 percentage point fall in fourth-quarter growth, the data showed.

The weak investment was attributed to a lack of civil engineering projects.

For the full year, South Korea's GDP rose 2.6 percent, compared to a rise of 3.3 percent in 2014 to post the slowest gain since 2012.

The central bank has said the economy is recovering steadily due to strong consumption, and it has grown more hawkish on interest rates, emphasizing the importance of long-term structural reform for South Korea's economy.

The Bank of Korea's base rate is currently at 1.50 percent, a level a majority of market participants believe will be kept unchanged for a prolonged period.

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