Economy grows slower than earlier predicted in Q1 amid weak investment, spending

Containers for exports and imports are stacked at a pier in South Korea's largest port city of Busan, June 6. Yonhap

Korea's economy grew at a slightly slower pace than earlier predicted in the first quarter of this year as investment and spending weakened amid lingering worries over the COVID-19 pandemic, central bank data showed Wednesday.

The country's gross domestic product (GDP) grew 0.6 percent in the January to March period from three months earlier, according to the preliminary data from the Bank of Korea (BOK).

The growth rate was slightly down from the 0.7 percent growth estimated in April, with the revision reflecting updated data on industrial output and other economic indicators.

The quarter-on-quarter growth slowed from a 1.3 percent rise tallied in the fourth quarter of last year ― year-on-year, Asia's fourth-largest economy expanded 3 percent.

The economy had been under pressure from the protracted fight against COVID-19 and stringent restrictions on business operations and people's movements.

But the government recently lifted almost all antivirus curbs as infections slowed with most people being vaccinated, raising hopes that the move will lead to more spending and investment down the road.

Private spending shrank 0.5 percent in the first quarter from three months earlier, the data showed.

Investment in construction and spending on facilities were also down 3.9 percent each over the same period.

Exports have been buttressing economic growth by expanding 3.6 percent in the first three months of the year, while imports declined 0.6 percent.

Despite robust exports, the economy is facing mounting uncertainty from rising inflation, the ongoing war in Ukraine that is aggravating global supply chain disruptions and aggressive monetary tightening moves in the United States and other major economies.

The BOK recently lowered its economic growth forecast for this year to 2.7 percent from 3 percent projected three months earlier.

The economy grew 4.1 percent last year, the fastest growth since 2010, when it posted a 6.8 percent rise. (Yonhap)