Economy grows 0.3 percent in first quarter on higher spending

Containers stacked up at the port of Busan on Thursday [NEWS1]

Korea’s economy grew 0.3 percent in the first quarter, in line with the central bank's April estimate.

Korea’s GDP grew 0.3 percent in the January-March period from a quarter earlier on increased private spending, according to the Bank of Korea on Friday.

The economy remained weak amid slow exports and the limited impact of China’s reopening.

Private spending grew 0.6 percent on-quarter as expenditures on services, including recreation, restaurants and accommodation, increased. Government consumption expanded by 0.4 percent, as expenditures on social security benefits increased, despite a drop in expenditures on goods. Construction investment grew 1.3 percent while facilities investment fell 5.0 percent.

Exports jumped 4.5 percent on a rise in exports of transportation equipment, including motor vehicles. Imports grew 4.2 percent led by imports of chemical products.

Manufacturing accelerated 1.4 percent on increases in transportation equipment and basic metals, while construction rose 3.0 percent on growth in building construction.

The economy grew negative 0.3 percent in the fourth quarter last year on a rapid fall in exports, led by a sluggish chip sector. The annual GDP last year was 2.6 percent.

“Unlike the period of high growth in the past, we are entering low-growth economic conditions and potential growth rate has also fallen,” said Shin Seung-cheol, director geneeral of the Bank of Korea's economic statistics division. Growth will stay weak in the first quarter but recover in the second half to achieve 1.4 percent growth, he added.

The Bank of Korea last month revised down the country’s growth forecast to 1.4 percent from the previous 1.6 percent projection in February. The bank attributed the revision to delayed recovery in the IT sector and the late impact of the restart of economic activities in China.

Korea’s Gross National Income grew by 1.9 percent on quarter, the steepest increase since the third quarter of 2020.

The GDP deflator, which measures changes in the prices of goods and services, rose by 1.4 percent on year.

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