Economy expands 1.8% in Q1, faster than earlier estimate: BOK
Containers are being unloaded at Busan Port, July 1. Yonhap
The Korean economy grew at the fastest pace in more than five years in the first quarter, supported by strong exports and solid domestic demand, central bank data showed Thursday.
The real gross domestic product (GDP) rose 1.8 percent in the January-March period from the previous quarter, 0.1 percentage point higher than the earlier estimate, according to preliminary data from the Bank of Korea (BOK).
The reading marked the strongest quarterly growth since the third quarter of 2020, when the economy grew 2.3 percent.
On a yearly basis, the economy expanded 3.8 percent in the first quarter, a sharp pickup from the 1.6 percent growth recorded in the fourth quarter of last year. The on-year growth was the highest since the fourth quarter of 2021, when the economy grew 4.5 percent from a year earlier.
The BOK said the 0.1 percentage-point upward revision to first-quarter GDP came as updated statistics related to facility investment and private consumption were reflected in the latest figures.
"A 0.1 percentage point gain in the first-quarter GDP is projected to increase the annual growth by 0.1 percentage point," said Kim Hwa-yong, director of the production, expenditure and income division at the BOK, during a press conference. "This change is expected to be reflected on the central bank's revised growth forecast to be released in August."
Asia's fourth-largest economy contracted 0.1 percent on-quarter in the fourth quarter of 2025 due to sluggish manufacturing.
However, strong exports and solid domestic demand drove the economic expansion in the first quarter.
Exports advanced 5.9 percent from the previous quarter, supported by strong global demand for semiconductors, machinery and automobiles. The figure marked the highest increase since the third quarter of 2020.
Facility investment grew 6.6 percent, marking the strongest growth in four years, and construction investment gained 1.4 percent.
Private consumption increased 0.6 percent, while government spending fell 0.4 percent.
The BOK said domestic demand and net exports contributed 0.7 percentage point and 1.1 percentage points, respectively, to the first-quarter economic growth.
On a nominal basis, Korea's GDP surged 10.5 percent from a month earlier, marking the sharpest expansion since the first quarter of 1976, when the economy grew 13 percent. From a year earlier, nominal GDP spiked 17.1 percent.
"The growth in nominal GDP is driven by highly improved profitability of exporting firms as well as rising domestic prices," the BOK official said.
The first-quarter real gross national income (GNI) rose a record 9.2 percent on-quarter, sharply outpacing real GDP's growth as strong chip exports helped improve the country's trade terms, the central bank added.
Nominal GNI jumped 11 percent in the first quarter from three month earlier, marking the sharpest growth in 50 years.
GDP measures production within a country, while GNI refers to the total income earned by a country's residents.
The BOK also announced the revised data on the country's GNI for 2025.
The per capita GNI advanced 0.3 percent from a year earlier to $36,963 last year.
It was slightly higher than its preliminary data of $36,855 released in March.
Supported by government stimulus measures and robust export performance, particularly in the semiconductor sector, the Korean economy is expected to gain further momentum in 2026.
The central bank earlier revised up its 2026 growth estimate to 2.6 percent, citing solid exports driven by a semiconductor super cycle.
Other local and international institutions lifted Korea's growth forecasts as the International Monetary Fund (IMF) projected growth of 1.9 percent this year, while the Asian Development Bank (ADB) also forecast 1.9 percent growth. The Korea Development Institute (KDI) earlier improved its growth forecast to 2.5 percent for 2026 from 1.9 percent.
Based on solid economic growth, the BOK has shown signs of a possible rate hike in the near future. The central bank's upcoming rate-setting meeting is slated for July.