Bank of Korea, 1Q Growth Rate Up to 1.7%... Possibility of Exceeding 4% Annual Growth (Comprehensive)

Q1 Growth Rate Revised Up from 1.6% to 1.7%
Growth Rate Raised Due to Export Recovery and Strong Industrial Activity
Last Year's Annual Growth Rate Also Revised from -1.0% to -0.9%
However, Per Capita GNI Declines for Second Year... $31,881

[Asia Economy Reporters Eunbyeol Kim, Sehee Jang] Our economy grew by 1.7% in the first quarter of this year. This exceeds the initially announced preliminary figure (1.6%), as exports increased more than expected, boosting the growth rate. As a result, the size of our economy has not only recovered to the pre-COVID-19 level but also raised expectations for an annual growth rate exceeding 4% for the first time in 11 years. However, due to the impact of the COVID-19 shock and the rise in the won-dollar exchange rate, last year's per capita Gross National Income (GNI) recorded $31,881, marking a decrease for the second consecutive year.

According to the '2021 First Quarter National Income (Provisional)' released by the Bank of Korea on the 9th, the real Gross Domestic Product (GDP) in the first quarter increased by 1.7% compared to the fourth quarter of last year. This marks three consecutive quarters of growth since the third quarter of last year, significantly surpassing the level of the fourth quarter of 2019, before the COVID-19 pandemic.

Private consumption in the first quarter rose by 1.2%, and government consumption also increased by 1.6%. While facility investment was revised downward by 0.4 percentage points, the export growth rate was revised upward by 1.3 percentage points. By economic activity, the service sector was sluggish, but manufacturing showed a growth of 3.8%, revised upward by 1.1 percentage points. The nominal GDP for the first quarter, reflecting inflation, rose by 1.9% quarter-on-quarter and 4.6% year-on-year.

Last year's real economic growth rate was revised upward by 0.1 percentage points to -0.9% from the previous figure (-1.0%). The 2019 growth rate was also revised upward from 2.0% to 2.2%. Last year's nominal GDP, reflecting price levels, was 1,933 trillion won, an increase of 0.4% compared to the previous year.

With the first quarter growth rate higher than expected, the possibility of exceeding 4% annual growth has increased. Park Yang-su, Director of the Economic Statistics Bureau at the Bank of Korea, stated, "If the average growth rate from the second to fourth quarters is around 0.7 to 0.8%, an annual growth of 4.1 to 4.2% is possible," adding, "This will likely create expectations in the market that the Bank of Korea's announced annual 4% growth may be revised upward." If the export growth expands further and vaccination efforts become more active, the growth rate is likely to exceed 4%.

According to the 'May Employment Trends' announced by Statistics Korea on the same day, the number of employed persons increased by nearly 620,000 compared to a year ago, marking three consecutive months of growth. The per capita GNI, which had declined for two consecutive years, is also likely to turn positive this year. Director Park said, "Since the nominal GDP in the first quarter also appeared higher than the real GDP growth rate, unless the exchange rate rises sharply, the per capita GNI will also increase."

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