Q1 National Income -2.0%↓... Lowest Since the Foreign Exchange Crisis (Update)

Q1 Real GDP Revised Upward from -1.4% to -1.3%
Nominal GDP -1.6%... Lowest Since Financial Crisis
GDP Deflator Negative for 5 Consecutive Quarters

On the 31st, as concerns about the resurgence of COVID-19 centered around the Seoul metropolitan area grow, Seoul's Hangang Park is bustling with many citizens. Most of the visitors to Hangang Park that day were not wearing masks and did not practice social distancing, rendering the government's strengthened quarantine measures ineffective. Photo by Yoon Dong-ju doso7@

[Asia Economy Reporter Jang Sehee] Nominal Gross National Income (GNI) in the first quarter of this year showed the largest decline since the 1998 foreign exchange crisis. This was due to continued decreases in corporate earnings and reduced consumption caused by the novel coronavirus disease (COVID-19). The first quarter real Gross Domestic Product (GDP) was revised upward compared to the preliminary estimate.

According to the provisional statistics on 'National Income for the First Quarter of 2020' released by the Bank of Korea on the 2nd, the nominal GNI growth rate in the first quarter of this year recorded -2.0% compared to the previous quarter. This is the lowest level since the second quarter of 1998 (-3.6%).

GDP reflecting the price level (nominal GDP) decreased by 1.6% compared to the previous quarter. Nominal GDP was at its lowest level since the fourth quarter of 2008.

The real GDP growth rate, which was preliminarily announced as -1.4% in April, was revised upward to -1.3% compared to the previous quarter. This is an increase of 0.1 percentage points from the preliminary estimate.

The real GDP was revised upward as additional economic activity data for March was incorporated. By economic activity, the service sector showed further weakness, while manufacturing was revised upward, resulting in this outcome.

Manufacturing decreased by 1.0% quarter-on-quarter, centered on transportation equipment and petroleum products, while construction increased by 0.2%, mainly in civil engineering and specialized construction.

Looking at GDP by expenditure items, facility investment (0.2%) and construction investment (0.5%) increased, but exports (-1.4%) and imports (-3.6%) showed sluggish performance.

Private consumption decreased by 6.5% as both goods such as clothing and cosmetics and services such as food, accommodation, and entertainment declined. Government consumption increased by 1.4%, mainly due to spending on goods.

Meanwhile, the Bank of Korea also released the 2018 national accounts (final) and 2019 national accounts (provisional) on the same day. The 2018 GDP growth rate was revised upward from 2.7% to 2.9%, and the 2019 GDP growth rate was maintained at 2.0%. The annual GDP deflator for last year was -0.9%.

Last year's total savings rate recorded the lowest in eight years at 34.7%, and the labor income share reached an all-time high of 65.5%.

This content was produced with the assistance of AI translation services.