South Korea, Asia’s fourth-largest economy, has recovered from the pandemic at a stronger rate than expected last quarter, as exports and domestic consumption increased.
The Bank of Korea reported this week that its gross domestic product grew 1.6% from the previous quarter during January-March. The Q1 results are higher than the market expectations for growth of 1.1%. The latest set of GDP figures mean that South Korean GDP is above the pre-pandemic levels. It is also the first year-on-year growth after three preceding quarters of contraction.
South Korea’s GDP increased 1.8% from the same time a year ago, as investment into the world’s tenth-largest economy increased. From the previous quarter, private consumption in South Korea increased 1.1%. Government spending increased by 1.7%. Exports rose 1.9%, whist facilities investment surged 6.6%.
Throughout the global pandemic, South Korea has been one of the better economic performers. The robust nature of the South Korean economy is due to strong overseas demand for its products which range from microchips to cars.
The Bank of Korea Governor Lee Ju-yeol had said earlier this month that he expects growth to reach around 3.5% in 2021, higher than the 3% forecast back in February.
Park Yang-soo, a director at the central bank said:
“The Korean economy even passed the level in the right before the coronavirus pandemic,”
“The country’s exports are even above the fourth quarter of 2019, although private consumption dropped about 5% compared to the level.”
South Korean Economy No Longer in Contraction
Last year saw the South Korean economy contract for the first time since the 1997-98 Asian financial crisis. The 1% contraction was, however, much better than many global economies. Only China showed growth in a pandemic-ravished 2020. The South Korean GDP rate in 2020 was better than that of the U.S., Japan, and the U.K. Overall, the South Korean response to the pandemic and its strong export industry meant resilience in its economy.
However, despite the light at the economic and pandemic tunnel getting that considerably brighter, South Korea and its neighbours are experiencing a third wave of the coronavirus.
