The Bank of Korea announced on Apr. 25 that South Korea’s GDP grew by 1.3% quarter-on-quarter in the first quarter (January-March) of this year. This marked the highest growth rate since the fourth quarter of 2021 when the economy expanded by 1.4%. For comparison, the previous year’s economy saw growth rates of 0.3% in the first quarter, 0.6% in the second quarter, 0.6% in the third quarter, and 0.6% in the fourth quarter, marking four consecutive quarters of growth.
The growth in the first quarter was primarily driven by an increase in exports and a surge in construction investment. Breaking down the growth by sector, construction investment jumped by 2.7%, fueled by building and civil engineering gains. Exports increased by 0.9%, driven by IT products, while private consumption grew by 0.8%, with rises noted in goods such as apparel and services, including food and lodging. Government consumption increased by 0.7%, supported by a surge in goods procurement.
Conversely, capital investment fell by 0.8%, mainly in transportation equipment, and imports decreased by 0.7%, predominantly in electrical equipment.
In light of these developments, global investment banks have recently upgraded their economic growth forecasts for Korea. The expansion in exports, particularly semiconductors and automobiles, is expected to boost the overall economic growth rate. The Korea Center for International Finance reported that UBS has raised its forecast for the Korean economy to 2.3% from 2.0%. Similarly, Citi has updated its projection to 2.2% from 2.0%, and HSBC has adjusted its forecast to 2.0% from 1.9%.
