Korea: Revised data confirm economy grew at weakest rate in two years in Q1
June 4, 2015
In the first quarter, GDP expanded 2.5% over the same period last year, according to revised data provided by the Bank of Korea. The result was slightly above the 2.4% increase initially reported but marked a deceleration from the 2.7% increase registered in the fourth quarter of last year. 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 2.4% expansion in Q1. Private consumption picked up slightly from a 1.4% increase in Q4 to 1.6% 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% expansion in Q4 to a meager 0.1% increase in Q1, which marked the weakest result in more than five years. Imports jumped from a 0.2% rise in Q4 to a 1.9% 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. This figure was unchanged from the preliminary estimate.
Author: Carl Kelly, Economist