Korea's economy expands 1.8% in Q1, faster than earlier estimate: BOK
With the Korean economy growing at its fastest pace in more than five years in the first quarter, the Bank of Korea and other local and international institutions lifted the country's growth forecasts.
The exterior of the Bank of Korea headquarters in Jung District, central Seoul, on Aug. 12, 2025YONHAP
The Korean economy grew at the fastest pace in more than five years in the first quarter, supported by strong exports and solid domestic demand, central bank data showed on Thursday.
The real GDP rose 1.8 percent in the January to March period from the previous quarter, 0.1 percentage point higher than the earlier estimate, according to preliminary data from the Bank of Korea (BOK).
The reading marked the strongest quarterly growth since the third quarter of 2020, when the economy grew 2.3 percent.
On a yearly basis, the economy expanded 3.8 percent in the first quarter, a sharp pickup from the 1.6 percent growth recorded in the fourth quarter of last year. The on-year growth was the highest since the fourth quarter of 2021, when the economy grew 4.5 percent from a year earlier.
The BOK said the 0.1 percentage point upward revision to the first-quarter GDP came after updated statistics related to facility investment and private consumption were reflected in the latest figures.
Asia's fourth-largest economy contracted 0.1 percent on quarter in the fourth quarter of 2025 due to sluggish manufacturing.
However, strong exports and solid domestic demand drove the economic expansion in the first quarter.
A car carrier transporting vehicles made by Kia Motors, part of Hyundai Motor, Korea's largest automaker, arrives at a port in Pyeongtaek on April 15, 2025.REUTERS/YONHAP
Exports advanced 5.9 percent from the previous quarter, supported by strong global demand for semiconductors, machinery and automobiles. The figure marked the highest increase since the third quarter of 2020.
Facility investment grew 6.6 percent, marking the strongest growth in four years, and construction investment gained 1.4 percent.
Private consumption increased 0.6 percent, while government spending fell 0.4 percent.
The BOK said domestic demand and net exports contributed 0.7 percentage point and 1.1 percentage points, respectively, to the first-quarter economic growth.
The BOK also announced the revised data on the country's gross national income (GNI) for 2025.
The per capita GNI advanced 0.3 percent from a year earlier to $36,963 last year, slightly higher than its preliminary data of $36,855 released in March.
Supported by government stimulus measures and robust export performance, particularly in the semiconductor sector, the Korean economy is expected to gain further momentum in 2026.
Export-bound containers are stacked at Pyeongtaek port in Gyeonggi on April 11.YONHAP
The central bank earlier revised up its 2026 growth estimate to 2.6 percent, citing solid exports driven by a semiconductor super cycle.
Other local and international institutions lifted Korea's growth forecasts, as the International Monetary Fund and Asian Development Bank projected growth of 1.9 percent this year. The Korea Development Institute earlier improved its growth forecast from 1.9 percent to 2.5 percent for 2026.
Based on solid economic growth, the BOK has shown signs of a possible rate hike in the near future. The central bank's upcoming rate-setting meeting is slated for July.
