Korea fell to 38th place among 41 major economies after posting growth of minus 0.161 percent in Q4 of last year, but rebounded sharply in the first quarter this year
South Korea’s GDP growth rate for the first quarter expanded 1.694 percent from the previous quarter, the highest among 22 major economies.
South Korea’s real gross domestic product (GDP) growth rate for the first quarter of this year has emerged as one of the highest among major global economies. Following a sluggish fourth quarter last year, the economy rebounded sharply on the back of surging exports, particularly in semiconductors and other information technology products. If the current trend continues, the country is poised to secure the top quarterly growth rate in the world for the first time in 16 years since 2010.
According to the Bank of Korea’s Economic Statistics System on May 12, South Korea’s GDP growth rate for the first quarter expanded 1.694 percent from the previous quarter, the highest among 22 major economies that had released preliminary data as of the previous day.
South Korea also outpaced Indonesia at 1.367 percent, and China at 1.3 percent, both of which have maintained relatively solid growth. Only three economies in the survey – South Korea, Indonesia and China – posted first-quarter above 1 percent.
They were followed by Finland at 0.861 percent, Hungary at 0.805 percent, Spain at 0.614 percent, Estonia at 0.581 percent, the United States at 0.494 percent, Canada at 0.4 percent and Germany at 0.334 percent.
Positive growth was also recorded in Costa Rica at 0.279 percent, Belgium at 0.2 percent, Austria at 0.197 percent, Italy at 0.165 percent, the Czech Republic at 0.153 percent, the Netherlands at 0.051 percent and Portugal at 0.022 percent.
In contrast, France posted a slight contraction of minus 0.005 percent, while Sweden at minus 0.21 percent, Lithuania at minus 0.444 percent and Mexico at minus 0.8 percent also recorded negative growth. Ireland’s economy shrank more than 2 percent in the first quarter alone, at minus 2.014 percent.
South Korea had fallen to 38th place among 41 major economies tracked by the central bank after posting growth of minus 0.161 percent in the fourth quarter of last year, but rebounded sharply in the first quarter this year.
If South Korea maintains the top position after all other countries release their preliminary figures, it will mark the first time in 16 years since the first quarter of 2010, when the country recorded 2.343 percent growth, that it ranks first globally in quarterly growth.
In early 2010, South Korea benefited from a recovery in global trade following the global financial crisis, which boosted its key export sectors such as semiconductors and automobiles. Exports once again fueled growth in the first quarter of this year.
First-quarter exports rose 5.1 percent, led by information technology products. Net exports contributed 1.1 percentage points to the overall growth rate. Samsung Electronics and SK hynix also supported the expansion by reporting first-quarter revenue of 57.2 trillion won, equivalent to about $38.5 billion, and 37.6 trillion won, respectively.
The stronger-than-expected performance, nearly double the Bank of Korea’s February forecast of 0.9 percent growth for the first quarter, has prompted domestic and overseas institutions to raise their full-year growth projections.
The Korea Institute of Finance on the previous day raised its forecast for this year’s economic growth to 2.8 percent from 2.1 percent, an increase of 0.7 percentage points. The Bank of Korea is scheduled to release its revised economic forecasts on May 28.
Still, uncertainty remains over whether South Korea can maintain such a high growth ranking in the second quarter. Quarter-on-quarter growth figures are heavily influenced by the previous quarter’s level, raising the possibility of a base effect after the strong first-quarter performance.
The government also said on April 23 that second-quarter growth would likely face adjustment due to overlapping factors including the base effect from the sharp first-quarter expansion and the escalating impact of conflicts in the Middle East.
Indeed, South Korea’s economy similarly exceeded expectations in the first quarter of last year with 1.174 percent growth, only to contract 0.028 percent in the second quarter.
Jung Suk-yee
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