SEOUL: South Korea’s economic growth halved in the first quarter from the previous three-month period as poor exports and stumbling capital investment cast doubts over policymakers’ more optimistic expectations for a near-term recovery.
First-quarter growth slowed to 0.4 percent in January-March over the previous quarter, the Bank of Korea (BOK) estimated on Tuesday, slightly below expectations and the weakest seen since the second quarter of last year. Sequential growth lagged a seasonally adjusted median forecast from a Reuters survey of 0.5 percent, and was below the 0.7 percent rise in the fourth quarter.
Shortly after the data release, the finance ministry said the economy would step up in the second quarter while the BOK stressed consumption was improving from March thanks to new smartphone and auto releases. Both were met with scepticism from analysts.
“There are so many moving parts right now, including whether improvement will be sustainable with the ongoing structural reforms. The government sounds too optimistic,” said Lee Sang-jae, chief economist at Eugene Investment & Securities. “Exports are not looking good with the won’s recent strength. We need to see China rebounding but that’s something we can’t count on. Shipments may improve in Q4 at soonest.”
