Economy grows 3.1 percent on year in the first quarter

Cargo being loaded in Busan on Feb. 1 [YONHAP]

The economy grew 3.1 percent in the first quarter on year, putting Korea on track to meet full-year central bank gross domestic product (GDP) growth targets.

Exports of goods and services grew 9.0 percent on year, led by exports of semiconductors, coal and petroleum products, according to the Bank of Korea on Tuesday. Imports of goods and services were up 7.9 percent in the same period, led by crude oil.

Private spending rose 4.5 percent on year despite a fall in expenditures on semi-durable goods, such as clothing and footwear, and on services. Government spending was up 6.5 percent during the same period.

Construction investment was down 5.3 percent on year, and facilities investment was down 6.0 percent. Investment in "intellectual property products" was up 5.8 percent in the same period.

"Negative effects are growing from the situation in Russia and Ukraine and slow global economic growth, and that is concerning," said Hwang Sang-pil, director general of the central bank's economic statistics department, at a press conference held Tuesday. The bank should "monitor the situation for a little longer as there are some positive aspects, like semiconductor and auto demand recovery."

In an announcement in February, the Bank of Korea projected Korea's GDP grow 3.0 percent this year. It forecast 2.8 percent growth in the first half and 3.1 percent in the second half.

"On year, GDP grew 3.1 percent in the first quarter, so mathematically, it's higher than the 2.8 percent forecast," Hwang said. If Korea's GDP "grows an average of 0.6 percent to 0.7 percent every remaining quarter, annual 3.0 percent growth will be possible."

The International Monetary Fund cut its 2022 economic growth outlook for Korea by half a point to 2.5 percent last week.

Hwang forecast the lifting of social distancing measures will help boost private spending and contribute to economic growth.

Gross Domestic Income (GDI) in the first quarter was up 0.1 percent on year.

Compared to the previous quarter, GDP grew 0.7 percent, while GNI was up 0.6 percent.

On the same day, the Export-Import Bank of Korea forecast exports in the second quarter to jump 14.4 percent on year to $173 billion.

"Though export prices are rising, slow economic growth in key countries and declines in new manufacturing orders are projected to slow export growth compared to the previous quarter," the bank said in reference to its second-quarter projection.

Its projection for export growth in the first quarter was 16.8 percent on year.

It added the actual export volume could be short of its projection if global supply disruptions continue as a result of the war between Russia and Ukraine and China's continued lockdowns of key cities due to spread of Omicron.

BY JIN MIN-JI [jin.minji@joongang.co.kr]