South Korea's Q1 Economic Growth Rate at 0.7%... Supported by Exports Amid Weak Consumption and Investment

Omicron and Ukraine Impact Reduce Growth Rate

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] South Korea's economic growth rate for the first quarter continued its upward trend for the seventh consecutive quarter, thanks to exports. However, due to the prolonged Ukraine crisis and the impact of Omicron, private consumption and investment decreased, resulting in a slower growth rate compared to the previous quarter. Given the first quarter growth, achieving an annual growth rate of 3.0% this year seems challenging.

The Bank of Korea announced on the 26th that the real Gross Domestic Product (GDP, preliminary figure) growth rate for the first quarter was 0.7% compared to the previous quarter. GDP, which converts goods and services produced domestically into market prices, is an indicator used to gauge South Korea's economic growth trend.

Following negative growth in the first quarter (-1.3%) and second quarter (-3.2%) of 2020 due to the COVID-19 outbreak, the economy grew for seven consecutive quarters: 2.2% in the third quarter, 1.1% in the fourth quarter, 1.7% in the first quarter of 2021, 0.8% in the second quarter, 0.3% in the third quarter, 1.2% in the fourth quarter, and 0.7% in the first quarter of this year.

Although private consumption, construction investment, and facility investment decreased, growth was maintained as exports continued to increase. Exports rose by 4.1%, centered on semiconductors and chemical products, while imports increased by 0.7% due to higher crude oil imports.

Private consumption decreased by 0.5% due to reductions in semi-durable goods (such as clothing and footwear) and services (entertainment and culture, transportation, food and accommodation).

Government consumption remained at the previous quarter's level as increased spending on goods was offset by a decrease in social security in-kind benefits.

Construction investment fell by 2.4% as both building and civil engineering construction declined, and facility investment decreased by 4.0% due to reductions in machinery and transportation equipment.

Real Gross Domestic Income (GDI) for the first quarter increased by 0.6%, slightly below the real GDP growth rate (0.7%) due to worsening terms of trade.

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