Korea: Economic growth picks up in the first quarter
April 25, 2013
In the first quarter, GDP expanded 1.5% over the same period the previous year. The reading matched the reading tallied in the previous quarter and was above market expectations of a 1.4% growth rate. The quarterly reading reflected an improvement in the contribution from the external sector to overall growth, which compensated a moderation in domestic demand.
Private consumption increased 1.6% annually in Q1, down from the 2.7% rise recorded in the previous quarter, while government spending weakened compared to the previous quarter (Q4 2012: +3.5% year-on-year; Q1: +1.4% yoy). Moreover, gross fixed investment declined 4.5% in the first quarter, a deterioration from the 4.2% contraction seen in the fourth and the worst result recorded since March 2009.
Meanwhile, the external sector's net contribution to overall growth rose from 0.8 percentage points in Q4 to 1.1 percentage points in Q1, as exports outpaced imports. Exports of goods and services increased 3.6% annually (Q4: +4.4% yoy), while imports rose 1.8% (Q4: +3.5% yoy).
A quarter-on-quarter comparison, however, points to an improvement in economic activity. The economy expanded 0.9% over the previous quarter in seasonally adjusted terms, faster than the 0.3% expansion recorded in the fourth quarter.
The Bank of Korea expects the economy to grow 2.6% this year and to accelerate to a 3.8% expansion in 2014. Consensus Forecast panellists are less optimistic than the Central Bank and now see the economy growing 2.9% this year down 0.1 percentage points from last month. For 2014, the Consensus panel projects the economy to expand 4.0%, which is unchanged from last month's forecast.