The Bank of Korea on Friday cut its benchmark interest rate by a half point to a record low of 2.5 per cent as its governor warned Asia’s fourth-largest economy had already begun to contract.

”Economic conditions are very bad this year in terms of growth, exports and employment,” said Lee Seong-tae, BoK governor. “The economy contracted substantially in the fourth quarter. We will do what is needed to help stabilise financial markets and to ward off a severe downturn."