South Korea economy averts recession thanks to consumer spending boost

SEOUL (Reuters) – South Korea’s economy in the first quarter expanded by 0.3% over the previous three-month period, official advance estimates showed on Tuesday, compared with a median 0.2% rise tipped in a Reuters survey.

It follows a 0.4% contraction of Asia’s fourth-largest economy during the final quarter of 2022, which was the first decline in 2-1/2 years. Economists usually define a recession as two consecutive quarters of contraction.

A year earlier, the country’s gross domestic product (GDP) expanded 0.8% during the January-March period, according to the Bank of Korea’s estimates, compared with gains of 1.3% in the prior quarter and 0.9% tipped in the survey.

The biggest contributor to GDP during the first quarter was private consumption, posting growth of 0.5%, whereas capital investment dented economic growth, dropping 4.0%. Exports rose 3.8%, while imports grew 3.5%.

The Bank of Korea said earlier this month that this year’s economic growth would be weaker than its earlier projection of 1.6%, as the central bank left interest rates steady for the second consecutive meeting in a row.

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