Since early October the Bank of Korea has slashed interest rates by a combined 3.25 percentage points over six stages.

Yoon Jeung-hyun, the South Korean finance minister, warned in February of a possible loss of 200,000 jobs on average this year, as the country's economy appeared to contract by two per cent due to the global downturn.

Plunging exports

South Korea's export-dependent economy has been hit hard by the global slowdown, with demand for cars and consumer goods plunging.

In February exports fell 18.3 per cent from a year earlier as revised government data showed shipments abroad performing worse than initial estimates.

Exports to China – South Korea's biggest market – fell 26.7 per cent in the first two months of this year, compared with a 35.4 per cent drop last December.

Exports to the United States for the same period lost 23.3 per cent over a year before, compared to a 9.4 per cent drop in December.

The country's 2008 trade deficit totalling $13bn is its biggest shortfall since 1996.

The government has forecast that the economy will shrink by around two per cent this year, the first contraction in 11 years.

However analysts paint a much bleaker picture, predicting the economy will shrink by as much as seven per cent to suffer the worst year in nearly 40 years of industrialisation.