S Korea manufacturing at 3-year low South Korean manufacturers are reporting the worst business conditions for three years as the world's seventh biggest exporter braces for a global slowdown and continued uncertainty in the eurozone. South Korea's weak data come hot on the heels of similar sentiments from Chinese manufacturers who have reported two consecutive months of declining activity. IN Asia-Pacific HSBC's purchasing managers" index, based on 400 South Korean factories, fell to 46.4 in December from 47.1 in November. Readings have now remained below 50, which denotes a contraction, for five consecutive months. South Korea's government is steeling itself for a tough 2012. It has sliced its growth forecast for the year to 3.7 per cent from an earlier estimate of 4.5 per cent, compared to 3.8 per cent growth during 2011. The finance ministry also predicts that export growth will slide to about 7.4 per cent this year from almost 20 per cent last year. It seems that the waves heading toward us this year will be much higher. The world economy is slipping into a new era of low growth, not just a temporary recession," Lee Myung-bak, South Korea's president, said in his new year address to the nation on Monday, in which he vowed to create more jobs for young people and bring down inflation. HSBC's findings chime with a survey from the Bank of Korea last week that manufacturers" confidence was at a two-and-a-half year low. Ronald Man, economist at HSBC, added the PMI data showed employment in manufacturing also slowed for the first time in three years and predicted the central bank would have to cut the base rate to 3 per cent from 3.25 per cent in the first quarter. Contraction in employment growth was particularly worrying given that Korea's low unemployment rate provided support for sustained domestic demand last year. With this pillar starting to look wobbly, pressure will increase on both the government and Bank of Korea to support growth soon," he said. Although manufacturers are becoming gloomier, Seoul's exports remain robust and surged 12.5 per cent last month compared with the same period last year. Still, the shipments cooled slightly from a 12.7 rise per cent in November. Inflation hit 4.2 per cent in December, unchanged from November and above the government's 4 per cent target. The president vowed to combat the impact of rising prices on poor workers by increasing the availability of cheap rental property. Mr Man said inflation would ease, blaming last year's spikes in food prices on an outbreak of foot-and-mouth disease which roiled the fragile rural economy. Falling inflation would allow for a rate cut, he argued. Barring any extreme disasters, inflation concerns will be over very soon. Time to start focusing on growth," he said.