SEOUL – South Korea’s heavily trade-reliant economy barely averted a recession posting slim growth in the first quarter, but the outlook remained clouded by weak exports due to a cooling global economy, even with China’s reopening.
South Korea’s gross domestic product (GDP) in the first quarter expanded by 0.3 percent over the previous three-month period, official advance estimates showed on Tuesday, compared with a median 0.2 percent rise tipped in a Reuters survey.
Still, economists saw it as little more than a technical rebound after a 0.4 percent contraction during the final quarter of 2022, which was the first decline in 2-1/2 years, and reinforced their view that the central bank’s tightening cycle is over.
“I don’t see any sign of strength from the detailed figures about the future path of the economy,” said Oh Suk-tae, economist at Societe Generale Securities in Seoul, adding he retains his forecast for 0.8 percent growth for the whole year.
The biggest contributor to GDP during the first quarter was private consumption, posting growth of 0.5 percent, while capital investment dented economic growth, dropping 4.0 percent. Exports rose 3.8 percent, while imports grew 3.5 percent.
There is high uncertainty both externally and internally, but a recovery in the IT sector and the Chinese economy is likely to stoke a rebound in the second half of the year, a central bank official said at a media briefing.
The Bank of Korea said earlier this month that this year’s economic growth would be weaker than its earlier projection of 1.6 percent, as the central bank left interest rates steady for the second consecutive meeting in a row. – Reuters
