SEOUL (REUTERS) – South Korea’s economic recovery beat expectations in the first quarter, extending the country’s export-led recovery and as the government maintained support for ailing small businesses.
Gross domestic product (GDP) grew a seasonally adjusted 1.6 per cent in the March quarter from three months earlier, the Bank of Korea said on Tuesday (April 27), faster than the median estimate of a 1.0 per cent growth in a Reuters poll and following a 1.2 per cent expansion in the December quarter.
Asia’s fourth-largest economy has continued to gain momentum after shrinking 1.0 per cent last year, its worst contraction since 1998, driven by smokestack industries such as chip and electronic manufacturing, mostly for exports.
GDP expanded 1.8 per cent year-on-year in the January-March period after shrinking a revised 1.2 per cent three months earlier, also beating an expected expansion of 1.1 per cent.
Growth was driven by exports and facility investment, which rose 1.9 per cent and 6.6 per cent quarter-on-quarter, respectively.
Private consumption grew at a slower 1.1 per cent on-quarter, after shrinking 1.5 per cent in the previous three months.
In early April, South Korea stepped up restrictions amid fears of a potential fourth wave of Covid-19 outbreaks, with daily cases hitting three-month highs and the vaccination rate staying at just above 4 per cent.
The low rate compares with a 42 per cent in the United States.
The BOK flagged surging coronavirus cases as fresh downside risks to growth earlier this month, though it saw robust exports and a pick-up in consumption continuing to power the economy.
BOK Governor Lee Ju-yeol said earlier in April that “mid-3 per cent” growth was “very possible” this year, up from a previous forecast for 3 per cent growth in 2021.
A Reuters poll on Friday showed economists expect South Korea’s economy to expand 3.4 per cent this year, its fastest annual growth in a decade.
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