Korean economy joins China in surpassing pre-Covid peak

Bloomberg

South Korea led the developed world to join China in exceeding the size of its pre-pandemic economy, as investment and exports helped it expand faster than expected.
Gross domestic product grew 1.6% during January-March from the previous quarter, the Bank of Korea said, easily beating economists’ consensus for a 1.1% expansion. That pushed GDP above the level at the end of 2019, before the coronavirus hammered activity.
Among developed economies, Korea’s recovery appears the fastest and the milestone of recovering all output lost during the pandemic came a quarter earlier than expected, the finance ministry said in a statement. China exceeded that level already in 2020, while the US is on track to reach the mark sometime this year.
V-Shaped Recovery
The data follows positive growth reports from China and Singapore, adding to evidence that the global recovery is gathering pace. But whether the momentum can carry over into the coming quarters hinges on the pandemic.
While vaccinations have helped flatten the infection curve in some countries, the latest crisis in India suggests no country is immune to sudden flare-ups that put the economy at risk.
Korea has been one of the better economic performers throughout the pandemic, thanks to strong overseas demand for its products ranging from chips to cars. Investment overtook exports in the first quarter as the key growth driver, with businesses pumping more money into production.
From the previous quarter, facilities investment jumped 6.6% while exports increased 1.9%. Government spending was up 1.7% and private consumption rebounded 1.1%. From a year earlier, overall GDP increased 1.8%.
Acting Prime Minister Hong Nam-ki said the country is on track to achieve growth in the mid-to-upper 3% range, higher than the 3.2% earlier forecast.
The first-quarter growth “proves the economy’s ability to recover is relatively solid,” Hong said on Facebook following the GDP release.
Still, jobs remain a concern for the economy, with groups such as the young and women still facing difficulties, Hong said.