South Korea GDP Growth Slows in Q1


The South Korean economy advanced by 2.5 percent year-on-year in the first quarter of 2015, slowing from a 2.7 percent expansion in October to December but above preliminary estimates. It is the lowest growth rate since the second quarter of 2012, as an increase in investment and consumption were not enough to offset a slowdown in exports.

Gross fixed capital formation grew by 2.4 percent in the three months to March, following a 0.7 percent expansion in the December quarter. Construction investment rose by 0.6 percent, rebounding from a 1.5 percent contraction in the preceding period, with a rise in building construction offsetting a decline in civil engineering. Facilities investment advanced by 5.8 percent, slowing from a 4.2 percent expansion in Q4, as investment in semiconductor and automobiles increased. Intellectual property products grew by 1.7 percent, accelerating from a 1.1 percent expansion in the previous quarter, mainly driven by R&D investment.

Final consumption expanded by 1.9 percent year-on-year, after registering a 1.8 percent growth in the December quarter. Private consumption rose by 1.5 percent from 1.4 percent growth in the previous quarter, centering around expenditures on durables such as automobiles and on services such as health care and financial services. Meanwhile, government consumption grew by 3.1 percent, the same pace as in the fourth quarter of 2014.

Exports grew by 0.1 percent, slowing from a 1.4 percent rise in Q4, mainly driven by sales of semiconductors and petrochemical products. Meanwhile, imports rose by 1.9 percent, markedly increasing  from 0.1 percent growth in the December quarter, mainly due to higher purchases of crude oil, machinery and automobiles.

On the production side, the manufacturing sector expanded by 0.7 percent, following a 2.4 percent growth in the preceding quarter and centering around the production of semiconductors and petrochemical products. Construction sector grew by 0.2 percent, reversing from a 1.0 percent contraction in the December quarter, mainly due to an increase in residential building construction. Services increased by 3.1 percent, the same pace as in the previous period. Meanwhile, growth of electricity. gas & water supply slowed by 3.0 percent from 3.8 percent. The agriculture sector  grew by 6.3 percent, accelerating from  1.3 percent increase in Q4.

For 2015 the Bank of Korea trimmed its growth forecast to 3.1 percent . In 2014, the economy expanded by 3.3 percent, following a 2.9 percent growth in 2013.

On a quarter-on-quarter basis, the economy grew by 0.8 percent, accelerating from a 0.3 percent expansion in the previous quarter.

South Korea GDP Growth Slows in Q1


Bank of Korea l Rida Husna l rida@tradingeconomics.com
6/4/2015 3:22:55 AM