'Private Consumption and Government Spending Turn Positive... Q1 Growth Rate at 1.6% (Update)'

3 Consecutive Quarters of Positive Growth
Exports Up 1.9%... Construction and Facility Investment Also Rise

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] South Korea's economic growth rate in the first quarter rebounded more sharply than expected. This was thanks to both private consumption and government consumption turning positive from negative (-), as well as a significant increase in facility investment.

The Bank of Korea announced on the 27th that the real Gross Domestic Product (GDP, preliminary figure) growth rate for the first quarter was 1.6% compared to the previous quarter. GDP, which converts goods and services produced domestically into market prices, is an indicator that gauges South Korea's economic growth trend. After recording negative growth rates in the first and second quarters of last year, it has shown positive growth for three consecutive quarters.

The simultaneous increase in private consumption and government consumption quickly raised the growth rate. Private consumption, which had fallen to -1.5% in the fourth quarter of last year, increased by 1.1%. Private consumption grew mainly in passenger cars, home appliances, and food and beverages.

Government consumption increased by 1.7%, mainly due to spending on goods. The significant rise in government consumption was influenced by the accelerated execution of the first quarter budget.

Both construction investment and facility investment also increased. Construction investment rose by 0.4% due to an increase in building construction, and facility investment increased by 6.6% as both machinery and transportation equipment grew. Facility investment recorded its highest increase since the third quarter of 2020 (8.1%), showing a substantial rise.

However, exports saw a reduced growth rate compared to the fourth quarter of last year. Exports increased by 1.9%, mainly in automobiles and mobile phones, which is a 3.5 percentage point decrease from the previous quarter. Imports increased by 4.9%, centered on crude oil and chemical products. Imports also rose by 2.4%, driven by machinery, equipment, and primary metal products.

Meanwhile, real Gross Domestic Income (GDI) in the third quarter increased by 1.8% due to improved terms of trade. Real GDI exceeded the real GDP growth rate.

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