Korea: Revised GDP data confirm Q1 slowdown
June 2, 2016
Revised data confirmed that the economy lost momentum in the first quarter, following a strong increase in the final quarter of 2015. Data showed that GDP increased 2.8% annually in Q1, which came in below the 3.1% increase tallied in Q4. The figure in Q1 was revised slightly up from the 2.7% rise previously reported in flash estimate. Sequential data were also revised. GDP increased a seasonally-adjusted 0.5% over the previous quarter in Q1 (previously reported: +0.4% quarter-on-quarter), which came in below the 0.7% expansion observed in Q4.
A slowdown in domestic demand caused by a deceleration in private consumption and fixed investment were the main drivers behind the softer reading in overall economic growth. Household consumption slowed from a 3.3% rise in Q4 to a 2.2% expansion in Q1. Gross fixed investment increased 3.1% in Q1, which was down from the 5.4% expansion observed in Q4. Conversely, government spending grew 4.5% in Q1, which was faster than the 3.9% increase observed in the previous quarter.
The revised data showed that the external sector showed better results than in the preliminary estimate. Exports of goods and services increased 0.7% in the first quarter, which was an improvement over the meagre 0.1% increase reported in the flash estimate. Nonetheless, the Q1 result in exports marked a sensitive deceleration over the 2.5% expansion registered in the fourth quarter. Meanwhile, imports also increased a healthier 1.9% in Q1, which was better than the 1.5% expansion reported in the preliminary estimate. Imports decelerated compared to a substantial 6.1% expansion in Q4. The contribution from the external sector to the economy was negative in Q1. Net exports subtracted 0.6 percentage points to overall economic growth in Q1, which, nonetheless, was better than the 1.6 percentage-point detraction registered in Q4.
Author: Ricardo Aceves, Senior Economist