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Bloomberg
South Korea’s economic growth accelerated in Q1 as a recovery in exports supported investment. Construction investment expanded, while consumption growth remained subdued.
Gross domestic product expanded 0.9 percent in first quarter from previous 3 months, when it rose 0.5%, Bank of Korea said. The median estimate of economists surveyed by economists was for 0.8% growth. From a year earlier, growth was 2.7%, compared with estimate for 2.6% gain by economists.
Positive signs for the economy are becoming more apparent, less than two weeks before Koreans go to the polls to elect a new president. The central bank and the International Monetary Fund both raised their projections for the nation’s growth this year, and Finance Minister Yoo Il-ho has said expansion may exceed the government’s 2.6 percent projection. Exports are expected to increase for a sixth month in April, and consumer sentiment has rebounded close to levels seen before the political scandal erupted late last year.
Still, headwinds persist, with uncertainties surrounding US policies and tensions with China over the US missile-defense system. A drop in the number of Chinese visitors to Korea and the impact of this on tourism-related spending may put pressure on second-quarter growth.
The economy will continue to improve, but the pace will be slower than the first quarter because exports are unlikely to post such high growth once base-effects disappear, and domestic demand remains weak, said Kim Doo-un, an economist for Hana Financial Investment in Seoul. Second and third-quarter growth will slow to around 0.5 percent, but there could be a rebound in the fourth quarter on new government’s stimulus policies, Kim said.