The Korea Herald


S. Korea's economy grows 0.3% in Q1, unchanged from earlier estimate: BOK data

By Yonhap

Published : June 2, 2023 - 10:47

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(Yonhap) (Yonhap)

South Korea's economy grew 0.3 percent in the first quarter of this year, unchanged from an earlier estimate, largely thanks to a sustained recovery in private spending amid an extended slowdown in exports, central bank data showed Friday.

The country's gross domestic product -- a key measure of economic growth -- increased 0.3 percent in the January-March period from three months earlier, according to the preliminary data from the Bank of Korea.

The first-quarter expansion follows a 0.3 percent on-quarter contraction the previous quarter, which means the economy narrowly avoided a recession. Technically, two consecutive quarters of economic contraction are judged to be a recession.

On a yearly basis, Asia's fourth-largest economy expanded 0.9 percent in the first quarter, compared with the fourth quarter's 1.4 percent on-year gain.

The latest figure matches the BOK's earlier estimate announced in early April. The latest data reflected updates in the data on industrial output and other key economic indicators.

The first-quarter growth is attributed to a mild recovery in private spending that has been bolstered by eased pandemic-related restrictions.

Private spending advanced 0.6 percent in the first quarter from the previous quarter, while construction investment rose 1.3 percent and government spending edged up 0.4 percent.

But facility investment dropped 5 percent.

Exports increased 4.5 percent on-quarter in the first quarter, a turnaround from a 3.8 percent drop the previous quarter, according to the data.

South Korea's economy has been facing growing uncertainty from home and abroad, amid worries that fast monetary tightening in major countries, including the United States, could precipitate a global economic slump.

The country's outbound shipments have logged an on-year fall since October last year amid aggressive monetary tightening by major economies to curb inflation.

The private spending is likely to be weighed down by higher interest rates.

Last month, South Korea's central bank held its key interest rate steady at 3.5 percent for the third straight time as it trimmed this year's growth estimate in the face of an extended slowdown in exports amid moderating inflation.

This marked the third straight time that the BOK has stood pat following a rate freeze in February and another in April. The rate freezes came after the BOK had delivered seven consecutive hikes in borrowing costs since April last year.

The central bank also trimmed this year's growth outlook for the economy to 1.4 percent from the earlier 1.6 percent as exports are widely expected to remain weak.

Last year, the country's economy grew 2.6 percent, slowing from a 4.3 percent advance the previous year amid aggressive monetary tightening at home and abroad.

The 2022 growth marked the slowest pace since 2020, when the economy contracted 0.7 percent amid the fallout from the coronavirus pandemic.

Meanwhile, the country's per-capita gross national income stood at $32,886 in 2022. The figure was 7.4 percent lower than a year earlier.

The per-capita GNI surpassed the $30,000 mark for the first time in 2017, but had been declining slightly in 2019 and 2020 before turning upward last year, the data showed. (Yonhap)