GDP Growth Rate for Q1 at -0.2%, Same as April Preliminary Estimate
Construction Investment, Exports, and Private Consumption All Decline
As both exports and domestic demand slowed, South Korea's economic growth rate for the first quarter of this year recorded -0.2%. This result is the same as the preliminary estimate announced on April 24.
The Bank of Korea announced on June 5 that the country's real gross domestic product (GDP) growth rate (final estimate) for the first quarter decreased by 0.2% compared to the previous quarter. This marks the first return to negative growth in three quarters since the second quarter of 2024.
After a surprise growth of 1.2% (final estimate) in the first quarter of last year, the South Korean economy immediately fell to -0.2%. Both the third and fourth quarters that followed saw growth of only 0.1%.
By sector, both domestic demand, exports, and imports showed weakness in the first quarter.
Looking at growth rates by expenditure category for the first quarter, government consumption remained at the same level as the previous quarter. However, private consumption decreased by 0.1% compared to the previous quarter, as an increase in goods such as telecommunications devices was offset by a decrease in services such as culture and entertainment. Construction investment declined by 3.1%, mainly due to a decrease in building construction. Facility investment fell by 0.4% as machinery, including semiconductor manufacturing equipment, decreased.
Exports decreased by 0.6% due to a decline in chemical products, machinery, and equipment, while imports fell by 1.1%, led by energy products such as crude oil and natural gas.
Compared to the preliminary estimate, facility investment (+1.7 percentage points) and exports (+0.5 percentage points) were revised upward, but imports, which are a subtractive item, were also revised upward by +0.9 percentage points.
In terms of contribution to first-quarter growth by expenditure category, domestic demand?including consumption and investment?contributed -0.5 percentage points, while net exports (exports minus imports) contributed 0.2 percentage points, highlighting the weakness in domestic demand. By item, private consumption contributed -0.1 percentage points and construction investment -0.4 percentage points, dragging down the growth rate. In the case of net exports, it contributed to an increase in the growth rate, as the decrease in imports (-0.5 percentage points) was larger than the decrease in exports (-0.3 percentage points).
By industry, manufacturing decreased by 0.6% compared to the previous quarter, as chemical substances, chemical products, machinery, and equipment declined. The construction industry fell by 0.4%, mainly due to a decrease in building construction. The service industry decreased by 0.2%, as increases in finance and insurance, and information and communications were offset by declines in transportation and real estate.
Real gross national income (GNI) for the first quarter increased by 0.1% compared to the previous quarter. Although real trade losses expanded due to worsening terms of trade, real net factor income from abroad increased, resulting in a growth rate higher than that of GDP.
The GDP deflator, an index reflecting the overall price level in the domestic economy, rose by 2.4% in the first quarter compared to the same period last year. The gross saving rate for the first quarter was 34.9%, down 0.4 percentage points from the previous quarter, while the gross domestic investment rate was 28.9%, down 0.8 percentage points.
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