Korea’s growth exceeded 1% for the first time in 2 years

South Korea’s growth rate exceeded one percent in the first quarter of this year after maintaining a below-one-percent range for a while. The country’s growth rate exceeded the market forecast by a large margin thanks to an increase in semiconductor and automobile exports, as well as a recovery in construction investment and private consumption.

According to the Bank of Korea on Thursday, South Korea’s real GDP increased by 1.3 percent in the first quarter of this year compared to the previous quarter, which is the highest growth rate recorded since 1.4 percent in the fourth quarter of 2021. While it was predicted by the market to be only slightly over 0.6 percent, which was the growth rate in the fourth quarter last year, the country’s growth rate exceeded one percent thanks to a recovery in export and domestic demand after having stayed below one percent since the first quarter of 2022.

The most significant factor in the growth rate rebound was the revitalization of the domestic economy. With a recovery in building and engineering construction, construction investment grew by 2.7 percent. Along with a 0.8 percent increase in private consumption compared to the last quarter, government spending also increased by 0.7 percent. The country’s exports have also been showing a consistent recovery. In particular, the export of smartphones and other IT products increased by 0.9 percent in the first quarter, driving the overall growth rate increase.

Furthermore, semiconductors, the No. 1 export item of South Korea, showed a sign of a meaningful recovery this year after poor performance in the previous year. On Thursday, SK hynix announced its performance results, which were over one trillion won higher than the financial sector’s forecast. It is believed to be the result of a boom in the high-value-added memory market, including high bandwidth memory, with a broader adoption of artificial intelligence.

The presidential office commented on Thursday that the South Korean economy has returned to a dynamic growth path led by the private sector. “While it is premature to officially announce the growth forecast for this year, it is expected to exceed the earlier forecast of 2.2 percent,” said Sung Tae-yoon, the chief presidential secretary on policy.


이동훈 기자 dhlee@donga.com