South Korea's first quarter economic growth faster than expected at 1.7%

Photo: Bloomberg

South Korea's economy grew slightly faster than expected in the first quarter, thanks to a robust recovery of exports and facility investment, inching the nation's economic growth closer to the pre-pandemic level, central bank data showed on Wednesday.

Asia's fourth-largest economy grew 1.7 per cent in the first quarter from three months earlier, 0.1 percentage point higher than earlier expected, according to preliminary data from the Bank of Korea (BOK).

The country's annualized growth in the January-March period was also revised up to 1.9 per cent, up 0.1 percentage point, Yonhap reported.

"Facilities investment grew by 6.1 per cent, led by the growth of investment in machinery and transportation equipment," the BOK said in a statement.

"Exports increased by 2 percent, as exports of goods, such as motor vehicles and mobile phones, expanded," it said.

Last month, the BOK sharply raised its 2021 growth outlook to 4 per cent from 3 per cent, while holding its benchmark policy rate unchanged at a record low of 0.5 per cent, amid a strong rebound in exports.

BOK Gov Lee Ju-yeol has said the pace of the economic recovery was faster than expected but more patience is necessary for the monetary policy.

However, Lee sounded a slightly hawkish tone when asked about the possibility of a rate hike this year, saying that such a hike "depends on the pace of recovery."

Park Yang-su, head of the BOK's economic statistics bureau, told reporters that if the economy grows 0.7 per cent or 0.8 per cent on a quarterly basis by the fourth quarter of this year, the annual GDP would grow 4.1 per cent or 4.2 per cent this year.

In the first quarter, private consumption grew 1.2 per cent on-quarter and construction investment rose 1.3 percent from the previous quarter, the BOK said.

South Korea's economy shrank 0.9 per cent in 2020, 0.1 percentage point higher than earlier estimated.

However, it marked the first annual contraction since 1998, when the economy shrank 5.1 percent due to the Asian financial crisis.

In 2019, the economy expanded 2.2 per cent, accelerating from its earlier estimate of 2 per cent.

Meanwhile, the BOK said the country's gross national income (GNI) increased 2.4 per cent in the first quarter from three months earlier.

"Real GNI grew by 2.4 per cent compared to the previous quarter, increasing more than the real GDP (1.7 per cent), owing to increased net factor income from the rest of the world and improved terms of trade," the BOK said.

In terms of US dollar value, the country's per capita income came to US$31,881 in 2020, down 1 per cent from a year earlier.



(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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