Korea's economic growth slowed significantly last year amid the European financial crisis. The Bank of Korea on Thursday said GDP grew 3.6 percent on-year in 2011, 0.2 percentage points lower than the central bank's December outlook of 3.8 percent and about half the 2010 growth rate of 6.2 percent.

The fourth-quarter growth rate stood at 0.4 percent from the previous quarter, a two-year low since 0.2 percent in the fourth quarter of 2009.

The slow growth was due to sluggish consumption and investment. Private consumption grew only 2.2 percent, while construction investment dwindled by 6.5 percent. But exports grew 10 percent on-year to play the leading role in driving growth.

Kim Young-bae of the BOK said, "The economy grew at a slower than expected in the fourth quarter because both companies and households reduced capital investment and consumption due to the European financial crisis."

But he predicted that the economy will grow relatively fast in the first quarter of this year, given the slow growth in the previous quarter. "Investment and consumption will increase as time passes because companies and households reacted too sensitively to the Eurozone crisis last year," he said.