Q1 Economic Growth Rate 0.3% Thanks to Private Consumption... Per Capita National Income $32,886 (Update)

Bank of Korea, Q1 GDP Growth Rate Preliminary Estimate Unchanged

Due to increased private consumption following the end of COVID-19 social distancing measures, South Korea's economy grew by 0.3% in the first quarter, avoiding two consecutive quarters of negative growth. This figure is consistent with the preliminary estimate released in April. Last year, South Korea's per capita Gross National Income (GNI) recorded $32,886, marking a return to a declining trend.

On the 2nd, the Bank of Korea announced that the real Gross Domestic Product (GDP, provisional) growth rate for the first quarter of this year was 0.3% compared to the previous quarter. Quarterly real GDP showed continuous growth of 0.7%, 0.8%, and 0.2% in the first, second, and third quarters of last year, respectively, but turned negative at -0.3% in the fourth quarter due to a sharp decline in exports. Thanks to private consumption in the first quarter of this year, the economy narrowly avoided negative growth.

The first quarter growth rate matched the preliminary estimate released in April. Private consumption increased by 0.6%, mainly driven by services such as entertainment, culture, food, and accommodation. Construction investment rose by 1.3% due to an expansion in building construction, and government consumption grew by 0.4%, mainly through social security in-kind benefits. On the other hand, facility investment plunged by 5.0%, centered on machinery such as semiconductor equipment.

Exports increased by 4.5%, supported by transportation equipment despite a decline in semiconductors. Compared to the preliminary estimate, construction investment was revised up by 1.1 percentage points, and private consumption was adjusted upward by 0.1 percentage points. However, facility investment was revised downward by 1.0 percentage point from -4.0% to -5.0%.

The contribution of private consumption to the first quarter growth rate was analyzed at 0.3 percentage points, while net exports pulled down the growth rate by 0.2 percentage points. Amid ongoing trade deficits, private consumption was the factor that boosted the growth rate.

Nominal Gross National Income (GNI) in the first quarter increased by 2.7% compared to the previous quarter. Real GNI also rose by 1.9%. The total savings rate increased by 0.7 percentage points to 33.4%.

According to the '2022 National Accounts (provisional)' released on the same day, real GDP grew by 2.6% last year. Nominal GDP (2,162 trillion won) increased by 3.9%. Per capita Gross National Income (GNI) was recorded at $32,886. Although this was higher than the $32,661 announced by the Bank of Korea in March, it declined from $35,523 in 2021, marking a downward trend.