Seoul - South Korea's economy recorded its slowest growth in more than three years in the first quarter on a drop-off in exports and falling spending my companies and consumers, the central bank said Friday.

Real gross domestic product (GDP) grew 0.7 per cent over the previous quarter, which had recorded 1.6-per-cent growth, the Bank of Korea said in its release of preliminary figures for January through March.

In comparison with the same period a year earlier, first-quarter GDP grew 5.7 per cent, the same pace on a year-on-year comparison from the quarter before, the bank said.

The GDP figures were likely to add pressure to the Bank of Korea to lower interest rates, analysts said. It has been caught between conflicting trends of rising inflation, caused in large part by higher oil prices, and signs of slowing economic growth.

Recent economic reports showed consumer and corporate confidence falling, retail sales down, new hires declining and factory production off as the global economy also faces a slowdown over the fallout from the US mortgage crisis.

Exports, which account for about 40 per cent of South Korea's GDP, fell 1.1 per cent in the first quarter from the previous quarter on slower growth in the exports of machinery and electronic products, the Bank of Korea said.

Consumers and companies scaled back their spending as private spending recorded 0.6-per-cent growth, down from 0.8 per cent in the fourth quarter, and business investment in new facilities fell 0.1 per cent.

The central bank of the world's 13th-largest economy said it expected economic growth to remain flat in the second quarter before it rises in the second half of the year.

It forecast growth for 2008 at 4.7 per cent after South Korea's economy grew 5 per cent each in the past two years.

Its prediction was lower than the 6 per cent forecast in March by the Finance Ministry.

The government of President Lee Myung Bak, who took office at the end of February, has said it plans to hit the ministry's growth target through tax cuts and deregulation. (dpa)