Q1 Economic Growth Rate 0.3%... Avoided Recession as Private Consumption Increased

by Seo Sojeong

Published 25 Apr.2023 08:08(KST)

South Korea's economy recorded slight positive growth in the first quarter of this year, driven by increases in private consumption and other factors.

On the 25th, the Bank of Korea announced that the real Gross Domestic Product (GDP) growth rate for the first quarter of this year (preliminary figure, quarter-on-quarter) was 0.3%.

With the GDP growth rate for the fourth quarter of last year recorded at -0.4%, South Korea's quarterly economic growth rate experienced a decline for the first time in 10 quarters since the second quarter of 2020 (-3.0%), when the impact of COVID-19 became pronounced. However, it returned to positive growth in the first quarter of this year, avoiding two consecutive quarters of negative growth.

Quarterly growth rates showed negative figures in the first (-1.3%) and second (-3.0%) quarters of 2020 during the spread of COVID-19, followed by growth in the third quarter (2.3%), fourth quarter (1.2%), first quarter of 2021 (1.7%), second quarter (0.8%), third quarter (0.2%), fourth quarter (1.3%), first quarter of last year (0.6%), second quarter (0.7%), and third quarter (0.3%). However, it turned negative in the fourth quarter of last year (-0.4%) and recorded 0.3% in the first quarter of this year.

Looking at the first quarter growth rate by sector, facility investment decreased, but private consumption and other areas increased.

Private consumption rose by 0.5%, mainly driven by service consumption such as entertainment, culture, food, and accommodation.

Government consumption increased by 0.1%, as spending on goods decreased but social security in-kind benefits increased.

Construction investment increased by 0.2%, centered on building construction.

Facility investment decreased by 4.0%, due to a decline in machinery.

Exports increased by 3.8%, mainly driven by transportation equipment such as automobiles, while imports rose by 3.5%, led by chemical products.

By industry, the service sector slightly decreased, but manufacturing and construction sectors showed growth.

Agriculture, forestry, and fisheries decreased by 2.5%, centered on crop farming, while manufacturing increased by 2.6%, driven by transportation equipment and primary metal products.

The electricity, gas, and water supply sector decreased by 2.0%, mainly due to gas, steam, and air conditioning supply, while construction increased by 1.8%, centered on building construction.

The service sector decreased by 0.2%, as increases in medical, health, social welfare services, and cultural and other services were offset by declines in wholesale and retail, accommodation and food services, and transportation.

The real Gross Domestic Income (GDI) in the first quarter increased by 0.8%, surpassing the real GDP growth rate.

[Image source=Yonhap News]