South Korea’s economic growth probably ticked up in the first quarter but fell short of achieving a firm recovery at a time of heightened risks from a falling yen and North Korea’s war threats, a Reuters poll shows.
Asia’s fourth-largest economy likely grew by a seasonally adjusted 0.6 per cent in the January-March period from the prior quarter, the median forecast from the survey of 25 analysts tipped, above a 0.3 per cent gain in the final quarter of last year.
It would be the fastest growth in a year and the second consecutive quarter of accelerating growth, but below a 0.8 per cent gain that the central bank predicted while holding interest rates steady against political pressure for a cut.
“Growth in the first quarter was slightly better than the last, but there is little difference,” said Lee Sang-jae, an economist at Hyundai Securities. “Beside the fact that the government boosted its spending, there were no big changes in domestic consumption or exports.”
Over the same period a year before, the survey tipped South Korea’s economy to post growth of a median 1.4 per cent in the first quarter, the worst since the third quarter of 2009 and a tad below a 1.5 per cent rise in the final quarter of last year.
President Park Geun-hye, sworn in just two months ago, has ordered swift stimulus policies, but weak exports and uncertain global prospects will keep holding back on spending at home by South Korean households and companies, analysts say.
Just more than half of South Korea’s annual gross domestic product is derived from private consumption, but its working population heavily relies on company investment and employment at exporters of goods such as electronics and cars.