South Korea’s economic growth decelerated in the first quarter, as pandemic restrictions weighed on private consumption and investment.
Gross domestic product grew 0.7% during the January-March period from the prior quarter, slower than a revised 1.2% expansion for the fourth quarter of 2021, preliminary Bank of Korea data showed on Tuesday.
The latest reading–above a market forecast of 0.6% quarter-on-quarter growth–showed both private consumption and construction investment swung to contraction and equipment investment shrank further, while exports kept solid growth on demand for semiconductors and chemicals.
Year-on-year, the economy expanded 3.1% in the first quarter following the prior quarter’s revised 4.2% growth.
That beat a market forecast of a 2.8% year-on-year expansion for the first quarter.
Consumer spending in South Korea may pick up in the second quarter as the government in April removed most of the Covid-19 social-distancing restrictions with the omicron variant’s spread slowing. The export-led economy is still facing challenges from the war in Ukraine and Chinese lockdowns, which exacerbate global supply-chain disruptions, analysts said.
The International Monetary Fund last week slashed its 2022 growth forecast for South Korea to 2.5% from 3%.
The Bank of Korea expects the country’s GDP growth to undershoot its earlier forecast of 3% for this year.