An 10-day Chuseok autumn holiday in October hit fourth-quarter industrial output, just as a slump in car exports erased the gains from booming overseas sales of computer memory chips.

Hyundai Motor and its Kia Motors affiliate said earlier this month 2017 shipments were a million vehicles below their 8.25 million target after struggling with competitiveness problems and trade issues.

The Bank of Korea said on Thursday that gross domestic product fell by a seasonally adjusted 0.2 percent in the fourth quarter, sliding from bumper growth of 1.5 percent in the third quarter, which was the fastest expansion in seven years.

“There is a strong base effect after particularly high third quarter growth and as irregular factors such as the Chuseok holiday shortened the number of working days for businesses,” said Chung Kyu-il, director general at the bank’s Economic Statistics Department said at a news conference.

Eoin Treacy's view

In a period of synchronized global economic expansion we have to remain alert for any signs of weakening expansion. There are exogenous factors such as the mid-Autumn festival that dragged down South Korea’s growth in the fourth quarter but the decline in vehicle exports is not so easily explained away.

Growth in accelerating just about everywhere else so it is reasonable to expect South Korea to be doing reasonably well. The performance of the stock market suggests investors are taking this news in their stride. The Kospi remains in a reasonably consistent uptrend.