The economy narrowly avoided recession thanks to the first-quarter gain, which came after the fourth quarter of last year’s quarterly drop of 0.3%. A recession technically exists when the economy contracts for two consecutive quarters. The first quarter of Korea‘s economy saw a 0.9% year-over-year increase, down from the fourth quarter’s 1.4% increase. In the first quarter, growth of 0.8% year over year was predicted by economists surveyed by Reuters.
The most recent figure is in line with the central bank’s earlier prediction, which was made public in early April and incorporates the most recent information on industrial production and other important economic metrics. The modest recovery in private expenditure that was sparked by the relaxation of virus-related restrictions was credited with driving growth in the first quarter.
South Korea’s Economic Growth
Private expenditure climbed by 0.6% in the first quarter compared to the same period last year, while building investment increased by 1.3%, public spending increased by 0.4%, and utility investment increased by 5%.
According to the figures, exports increased 4.5% every quarter in the first quarter compared to a 3.8% decrease in the fourth. Fears that a quick tightening of monetary policy in important nations like the United States could trigger a worldwide recession have increased anxiety about the future of South Korea’s economy both domestically and internationally.
- Korea’s economy avoids recession with 0.9% Q1 growth
- Central bank predicts growth in the first quarter due to private expenditure recovery.
- South Korea’s exports rise 4.5% in the first quarter amid global recession concerns.
Since October of last year, Korean exports have decreased year over year as a result of severe monetary tightening by major nations to combat inflation. Rising interest rates will probably have an impact on private spending.
The nation’s central bank downgraded its growth projections for this year as a result of a protracted downturn in exports and low inflation and has frozen its main interest rate at 3.5% for the third time in a row.
After twice freezing interest rates—the first time in February and the second time in April—the Bank of Korea has now done so three times in a row. After the Bank of Korea increased borrowing prices seven times in a row starting in April of last year, the interest rate freeze followed.
As exports are anticipated to continue poor, the central bank also reduced its projection of domestic economic growth for this year from 1.6% to 1.4%. The economy of the nation expanded by 2.6% last year, down from 4.1% growth in 2021 due to severe domestic and international monetary tightening. Since 2020, when the economy shrank by 0.7% as a result of the coronavirus outbreak, growth in 2022 was at its slowest.
