By Yoon Ja-young
The economy has posted growth below 1 percent for four consecutive quarters on weak consumption, investment and exports.
Economists are concerned that the economy is unlikely to see higher growth due to structural problems such as growing household debt, stagnant incomes and a rapidly ageing population.
The Bank of Korea announced that real GDP grew 0.8 percent in the first quarter, compared to 2.4 percent a year ago. The GDP marked 361.9 trillion won.
Private consumption increased 0.6 percent from the fourth quarter last year, continuing the sluggish mood. Corporate investment is also slow. Facility investment had zero growth, as did exports.
"The poor performance in exports seems to be due to a decrease in overseas' sales of ships and automobiles," said Jeon Seung-chul, a senior official from the central bank, at a media briefing.
Construction investment, which increased by 7.5 percent, led the GDP growth. The government's deregulation of mortgages and the housing market recovery has led to an increase in construction.
Some economists are expecting the economy to grow at just under three percent for the year, due to the slowdown in consumption, investment and exports.
According to the Federation of Korean Industries, household consumption increased by 12.6 percent in 1994, but growth slowed to 2.4 percent last year.
For those in their 50s who are soon facing retirement, the ratio of consumption compared with disposable income, fell to 72.2 percent between 2010 and 2014 from an average of 78.9 percent between 2004 and 2008.
"Due to concerns over low growth, people are increasing savings to prepare for retirement. There won't be notable recovery in consumption," said Lee Geun-tae, an economist at LG Economic Research Institute.
The economic think tank expects the economy to grow 3 percent this year, lower than last year's 3.3 percent.
Businesses are also refraining from making investment, with corporate spending by conglomerates decreasing by 2.3 percent last year.
Exports, which have sustained the economy previously, are also showing signs of a slowdown. The central bank expects the country's annual exports to decrease 1.9 percent this year.
"With the low interest rate positively working with the assets market, construction investment will play an important role in any recovery. However, the slowdown in emerging economies and increasing competition will make exports record no growth," Lee said.
The economy has posted growth below 1 percent for four consecutive quarters on weak consumption, investment and exports.
Economists are concerned that the economy is unlikely to see higher growth due to structural problems such as growing household debt, stagnant incomes and a rapidly ageing population.
The Bank of Korea announced that real GDP grew 0.8 percent in the first quarter, compared to 2.4 percent a year ago. The GDP marked 361.9 trillion won.
Private consumption increased 0.6 percent from the fourth quarter last year, continuing the sluggish mood. Corporate investment is also slow. Facility investment had zero growth, as did exports.
"The poor performance in exports seems to be due to a decrease in overseas' sales of ships and automobiles," said Jeon Seung-chul, a senior official from the central bank, at a media briefing.
Construction investment, which increased by 7.5 percent, led the GDP growth. The government's deregulation of mortgages and the housing market recovery has led to an increase in construction.
Some economists are expecting the economy to grow at just under three percent for the year, due to the slowdown in consumption, investment and exports.
According to the Federation of Korean Industries, household consumption increased by 12.6 percent in 1994, but growth slowed to 2.4 percent last year.
For those in their 50s who are soon facing retirement, the ratio of consumption compared with disposable income, fell to 72.2 percent between 2010 and 2014 from an average of 78.9 percent between 2004 and 2008.
"Due to concerns over low growth, people are increasing savings to prepare for retirement. There won't be notable recovery in consumption," said Lee Geun-tae, an economist at LG Economic Research Institute.
The economic think tank expects the economy to grow 3 percent this year, lower than last year's 3.3 percent.
Businesses are also refraining from making investment, with corporate spending by conglomerates decreasing by 2.3 percent last year.
Exports, which have sustained the economy previously, are also showing signs of a slowdown. The central bank expects the country's annual exports to decrease 1.9 percent this year.
"With the low interest rate positively working with the assets market, construction investment will play an important role in any recovery. However, the slowdown in emerging economies and increasing competition will make exports record no growth," Lee said.
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