The Korean economy grew 0.3 percent in the first quarter, thanks to an increase in private consumption following the exit from Covid social distancing measures.

The Bank of Korea announced on Friday that the country’s provisional real gross domestic product (GDP) grew 0.3 percent in the first quarter from a quarter earlier, maintaining the preliminary estimate released in the last week of April.

The quarterly growth rate was negative in the first two quarters of 2020 due to the Covid outbreak, but it turned positive in the third quarter with a 2.3 percent growth. The trend continued for nine consecutive quarters until the third quarter last year.

The growth rate turned back to negative in the fourth quarter last year, shrinking 0.4 percent due to a sharp decline in exports before the rebound in the first quarter this year.

By sector, private consumption increased by 0.6 percent in the first quarter, mostly in services, such as entertainment and dining & hospitality.

Construction investment also rose by 1.3 percent following increases in new buildings. Government spending grew by 0.2 percent, mainly in social assistance benefits.

Facilities investment, however, fell by 5.0, largely in machinery, such as semiconductor equipment.

Exports increased by 4.5 percent, with growth in transportation equipment offsetting declines in other segments like semiconductors. Import growth was lower than exports at 4.2 percent.

Compared with the preliminary readings, construction investment was revised upward by 1.1 percentage points, and both private and government spending were adjusted up by 0.1 percentage points each.

Facilities investment, however, was revised down 1.0 percentage points to a negative 5.0, from a negative 4.0 percent.

The contribution of private spending was calculated to be 0.3 percentage points. This means that private consumption boosted growth in the first quarter.



Net exports, however, dragged down the growth rate by 0.2 percentage points, indicating that the recent trade deficit has affected economic growth.

By industry, manufacturing grew by 1.3 percent, mainly with increases in transportation equipment and primary metal products. Construction also grew by 3.0 percent.

The service sector was unchanged from the earlier quarter, as 2.9 percent growth in medical, health care and social welfare was offset by negative growth in transportation that was a negative 3.9 percent.

Nominal gross national income (GNI) in the first quarter grew by 2.7 percent compared with the earlier quarter. Nominal net factor income from the rest of the world increased to 19.3 trillion won ($14.7 billion) from 9.8 trillion won, outpacing nominal GDP growth at 1.0 percent.

Real GNI also rose by 1.9 percent, as real net factor income from the rest of the world grew to 14.9 trillion won from 8.1 trillion won, also higher than real GDP growth of 0.3 percent.

The gross savings rate rose by 0.7 percentage points to 33.4 percent. This was because the growth rate of the gross national disposable income was higher at 2.6 percent than the growth rate of final consumption expenditure at 1.5 percent.

The provisional national accounts for 2022 were also released Friday. According to these data, real GDP last year grew by 2.6 percent.

Nominal GDP also grew by 3.9 percent to 2,162 trillion won. Per capita GNI stood at $32,886, $225 higher than the $32,661 initially announced by the central bank in early March.

By Pulse

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