SEOUL: Economic growth in the first quarter continued to remain below the 1-percent barrier, fueling fears of long-term stagnation in Asia’s fourth-largest economy.The Bank of Korea announced Thursday that the economy grew 0.8 percent in the first three months compared with the previous quarter. That was an improvement over the 0.3 percent quarter-on-quarter growth reported in the last three months of 2014.
Year-on-year the economy grew 2.4 percent, which is the lowest rate in two years.The last time the economy grew so slowly was in the first three months of 2013 when it grew 2.1 percent compared with the previous year.
Near-zero quarterly GPD growth has continued for four consecutive quarters since it retreated to a 0.5 percent quarterly growth in the April-June period last year when consumer sentiment contracted after the unexpected tragedy of the sinking of the ferry Sewol. Ever since, the economy has had trouble getting back on its feet despite various stimulus strategies tried by the government.
Consumption in the private sector was still sagging, the BOK report showed, inching up a mere 0.6 percent from the previous quarter. Private consumption growth has been lingering in a range of 0 to 1 percent over the past year, except the second quarter of 2014, when it shrank 0.4 percent.
“Although consumption in the private sector rebounded from the previous quarter, its absolute level is not that high,” Jeon Seung-cheol, a BOK official, said at a briefing on Thursday. “It is hard to say that consumption in the private sector has been revitalized.”
Government spending was also sluggish, central bank data showed, advancing 0.2 percent from the previous quarter.With stagnant consumption in both the public and private sectors, investment by companies on facilities posted zero growth in the first quarter.
A notable increase in investment was only seen in construction, which rose 7.5 percent quarter-on-quarter, boosted by the government’s easing of regulations in the real estate market.
