South Korea’s economy in 2019 marked the slowest growth pace in a decade, mostly weighed down by the US-China trade tensions, the central bank said Wednesday.

The nation’s gross domestic product expanded 2.01 percent on-year, according to advance data from the Bank of Korea.

While the government’s 2-percent target has been attained, it fell short of the potential growth rate of 2.5-2.6 percent. This also was the slowest on-year growth since 2009, when the economy grew 0.8 percent amid the global financial crisis.

During the year, government spending climbed 6.5 percent while private consumption marked 1.9 percent, the lowest since 2014. Exports expanded 1.5 percent but key investments such as equipment and construction contracted 8.1 percent and 3.3 percent, respectively, from a year earlier.

“The global trade environment was not favorable last year due to the US-China trade tensions, and exports remained slow as the recovery of the semiconductor industry was delayed,” Park Yang-su, director of economic statistics at BOK, said in a press briefing.

Despite the overall market disappointment, Deputy Prime Minister and Finance Minister Hong Nam-ki viewed the country’s economic growth was relatively favorable, given the persisting challenges.

“It is significant that we have held on to the psychological barrier of 2 percent (growth),” the chief fiscal policymaker said in a meeting with local industry officials to promote the country’s competitiveness on parts, materials and equipment.

“The growth may have fallen below initial expectations, but will henceforth help our economy gain new momentum.”

Speculations had been rampant that the country’s growth pace would dip to the low 1 percent range and policymakers may round off the precise figure to meet the 2 percent mark.

Despite the skepticism, the economy made a last-minute spurt in the fourth quarter on the back of active fiscal spending, data showed.

The fourth-quarter GDP expanded 1.2 percent from the previous quarter, up conspicuously from the 0.4 percent on-quarter growth for the July-September period. In the first quarter last year, the country marked a 0.4 percent contraction in economic growth.

“(The 2 percent growth) can mostly be attributed to the government’s fiscal efforts, especially during the October-December period,” said a senior official.

“What matters now is to maintain a steady balance (in quarterly figures) so that the on-year growth does not post a drastic drop this year.”

By Bae Hyun-jung (tellme@heraldcorp.com)