Korea GDP


Korea: Economy grows at weakest rate in two years in Q1

April 23, 2015

In the first quarter, GDP expanded 2.4% over the same period last year. The expansion was weaker than the 2.7% increase registered in the fourth quarter of last year and just below the 2.5% rise that the markets had expected. Moreover, the growth tallied in Q1 was the weakest result in two years.

The slowdown in economic activity reflects that a deterioration in the external sector more than offset an improvement in the domestic sector. Fixed investment accelerated from a mild 0.7% increase in Q4 to a 2.5% expansion in Q1. Private consumption picked up slightly from a 1.4% increase in Q4 to 1.5% in Q1, while government spending increased 3.1% for a second straight period.

On the external front, exports of goods and services dropped from a 1.4% increase Q4 to a flat reading in Q1, which marked the weakest result in more than five years. Imports jumped from a 0.2% rise in Q4 to a 1.8% expansion in Q1. As a result, the external sector’s net contribution to overall economic growth swung from plus 0.8 percentage points in Q4 to minus 0.9 percentage points in Q1.

A quarter-on-quarter comparison showed that GDP increased a seasonally-adjusted 0.8% in Q1, which was up from the 0.3% increase tallied in Q4.

The Bank of Korea sees the economy growing 3.1% in 2015 and 3.4% in 2016. FocusEconomics Consensus Forecast panelists foresee the economy growing 3.3% this year, which is down 0.1 percentage points from last month’s estimate. For 2016, the panel projects that the economy will expand 3.5% as well.

Author:, Economist

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Korea GDP Chart

Korea GDP Q1 2015

Note: Year-on-year changes of GDP in %.
Source: KOSTAT-KOSIS and FocusEconomics Consensus Forecast.

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