Seoul - South Korea's industry output logged its sharpest drop on record, pushing South-East Asia's fourth largest economy further towards a deep recession.

Output in the mining and manufacturing sectors fell by 25.5 per cent year-on-year in January, after dropping 18.7 per cent in December, the statistics office in Seoul said. It was the sharpest drop since 1970, when such data was first compiled.

The office attributed the contraction to shrinking production of semiconductors or cars, key products in South Korea's export-oriented economy. A number of South Korean companies drastically cut production as a result of the global downturn.

Owing to slumping demand in Asia and the rest of the world, South Korean exports contracted for the fourth consecutive month in February. Exports dropped by 17.1 per cent to 25.8 billon dollars, the economy ministry said. In January exports logged a record 33.8-per-cent drop.

Imports dropped by 30.9 per cent to 22.5 billion dollars, creating a trade surplus of 3.3 billion dollars, the biggest since July 2007.

In February, the Seoul government abandoned its positive growth forecast for 2009. Finance Minister Yoon Jeung Hyun said he expected the economy to contract bo 2 per cent.

The gross domestic product shrank by 5.6 per cent in the fourth quarter of 2008 compared with the previous quarter. (dpa)