ADVERTISEMENT
News » Money
Jul 24, 4:10 AM EDT

South Korea unveils stimulus plans as shock of ferry sinking slows growth


AP Photo
AP Photo/Lee Jin-man
World Video

Buy AP Photo Reprints
Multimedia
Swift negotiations free U.S. journalists
Timeline of U.S.-North Korea relations
Timeline of North Korea's nuclear and missile programs
Depth of Field: North Korea
A look at Kim Jong Il
Truth emerges about Kim Soo-im
Commission: U.S. military killed Korean refugees
South Koreans Protest U.S. Beef Accord
S. Korea Women Keep Diving Tradition Alive
Bittersweet Homecoming: Koreans Return Home After 68 Years in Russia
Latest News
South Korean teens testify they were told to stay, but helped each other escape sinking ship

AP PHOTOS: North Korea marks 1950-53 war anniversary

North Korea fires missile into sea on eve of 61st anniversary of Korean War armistice signing

Police says eldest son of sunken ferry owner detained; no cause of death for father determined

South Korea news agency says police detain eldest son of sunken ferry owner.

Multimedia
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
Stocks fall as results at Amazon, Visa raise worries about consumers; Dow ends below 17,000

How the Dow Jones industrial average and other major indexes fared on Friday

Visa, Amazon, Qlik Technologies, WellCare, and Informatica are big market movers

US stocks end lower after results from Amazon, Visa disappoint investors

US stocks fall at midday after results from Amazon, Visa disappoint investors

British economy grows 0.8 percent in 2nd quarter, exceeds pre-downturn level

German business confidence drops for 3rd month in a row amid Ukraine, Middle East concerns

Obama calls anew for limits on US company mergers overseas, says it's a question of patriotism

IMF cuts global growth forecast because of slowdowns in US, Russia and emerging markets

US stock market inches higher at open after Facebook, Ford and others report quarterly results

Interactives
Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt

SEOUL, South Korea (AP) -- South Korea's government announced a $40 billion stimulus plan Thursday after the shock of a deadly ferry sinking slowed economic growth to the lowest level in three quarters.

The finance ministry said government spending would increase by 11.7 trillion won ($11.4 billion). Another 29 trillion won would be available to small- and medium-sized companies through loans and other financial support.

To stimulate the real estate market, the government will ease mortgage rules that limit household loans for home buyers.

In announcing the stimulus, the ministry lowered its forecast for South Korea's economic growth this year to 3.7 percent from 3.9 percent.

A slump in domestic spending crippled growth during the first half while there are uncertainties in the global economy that could slow exports during the second half, it said in a statement.

Earlier Thursday, the Bank of Korea said Asia's fourth-largest economy grew 3.6 percent from a year earlier in the April-June quarter after expanding 3.9 percent in the first quarter. That was the slowest growth in three quarters.

From the previous quarter, the economy expanded 0.6 percent, the slowest pace in more than a year.

The central bank said even though exports continued solid growth, consumer spending turned negative. Consumer spending fell 0.3 percent, the worst since the third quarter of 2011.

Earlier this month, the bank reduced its forecast for economic growth this year to 3.8 percent from 4.0 percent, citing a deadly ferry sinking in the spring that dented consumption.

The April 16 ferry disaster that killed 294 people and left 10 missing shocked South Koreans and left the country in grief for weeks. Massive cancellations of trips followed the tragedy, hitting food, service and entertainment sectors that serve tourists.

The latest growth data likely boost expectation that the Bank of Korea will cut its key interest rate as soon as next month. The bank has kept its benchmark interest rate at 2.5 percent since May, 2013. One policymaker disagreed with the rate freeze during the bank's July meeting.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.

 
ADVERTISEMENT