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Freight containers fill Busan Port. (Yonhap)

Driven by improved private consumption, South Korea’s economy grew by 0.3% in the first quarter of 2023, narrowly escaping recession after a contraction in the fourth quarter of last year.

The Bank of Korea on Tuesday announced that the country’s real gross domestic product (GDP, annualized and seasonally adjusted) was up 0.3% in the period from January to March from the previous quarter. On a year-over-year basis, it was up 0.8%.

Broken down by spending sector, private consumption was up 0.5% from the previous quarter, led by performing arts and entertainment and face-to-face services such as restaurants and lodging.

Construction investment also increased by 0.2%, while government consumption increased by 0.1%, mainly due to mandatory social security expenditures such as health insurance benefits. In contrast, capital expenditures plunged 4.0%, led by export manufacturing.

The rebound in growth in the first quarter was largely driven by higher private consumption. Of the 0.3% real growth, domestic demand, including private consumption, contributed 0.3 points.

Excluding private consumption growth, the economy was flat in the first quarter. Net exports (exports and imports) brought down growth by 0.1 points. The contribution of net exports to growth has been negative for four consecutive quarters, since the second quarter of 2022.

“This is the first time that net export growth contribution has been negative for four consecutive quarters since the second quarter of 1998 to the first quarter of 1999, right after the foreign exchange crisis,” said Shin Seung-chul, director general of the Bank of Korea’s economic statistics division.

By Park Soon-bin, senior staff writer

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