Korean economy shrinks

South Korea’s economy shrank in the fourth quarter of 2008, contracting from the previous year for the first time in a decade as sharply lower overseas demand for the country’s products devastated production and exports.

The Bank of Korea announced that gross domestic product contracted 3.4% in the three months ending December 31 compared with the same period a year earlier.

South Korea’s economy last shrank on a year-on-year basis in the fourth quarter of 1998, when it contracted 6% while the country was in the throes of the Asian economic crisis.