Figures on domestic demand also posted solid growth in December but a reduced pace of growth in the statistics agency's official leading indicator suggested industrial activity would lose some of the momentum in the coming months. Markets shrugged off the data since they had already absorbed fourth-quarter growth figures earlier this week, which were also below expectations.
"Factory utilisation rates were high and local consumption rose in December, but it will be difficult for that kind of strength to continue beyond the first quarter," said Lee Sung-kwon, chief economist at Shinhan Investment Corp. The composite leading indicator grew a strong 12.8 percent in December from a year earlier after a 12.6 percent gain in November, but the monthly rise of 0.2 percentage point was a drop from a 1.3 percentage point rise set in November.
"The positive momentum in the domestic economy is ongoing but the pace has been weakening, given that the rate of gains in the leading indicator dropped," said June Park, economist at Woori Investment & Securities. Although analysts play down the direct impact on South Korean exports from China's move to rein in bank lending, global commodities prices have come under pressure recently on concerns about a possible slowdown in the giant economy.