S. Korea’s economy grows at slower clip in Q1 amid omicron woes, Ukraine war

South Korea’s economic system grew at a slower tempo through the first quarter as consumption and company funding remained sluggish amid the quick unfold of the omicron variant of COVID-19 and heightened uncertainty over the Russian invasion of Ukraine, central financial institution knowledge confirmed Tuesday.

The nation’s gross home product is estimated to have grown 0.7 p.c on-quarter within the January-March interval, in keeping with the information from the Financial institution of Korea (BOK).

It was slower than a 1.2 p.c rise tallied within the fourth quarter of final 12 months. From a 12 months earlier, Asia’s fourth-largest economic system expanded 3.1 p.c.

The on-quarter progress decelerated as client spending and company funding remained sluggish amid the rampant unfold of the omicron variant.

South Korea noticed coronavirus infections surging early this 12 months with day by day circumstances peaking at 621,178 circumstances on March 17.

The quick unfold of the extremely infectious illness had brought about folks to chorus from out of doors actions and led to much less spending.

Shopper spending shrank 0.5 p.c on-quarter within the first quarter as folks minimize down on spending on leisure, transportation, eating places and lodging, the information confirmed.

Funding in building additionally declined 2.4 p.c, and facility funding contracted 4 p.c over the identical interval.

Exports remained comparatively strong, with abroad shipments rising 4.1 p.c within the first quarter. The on-quarter progress was, nevertheless, slower than a 5 p.c advance tallied within the fourth quarter.

Imports grew 0.7 p.c amid excessive oil and commodity costs, although they had been sharply down from a 4.8 p.c acquire three months earlier, the information confirmed.

South Korea’s economic system is underneath rising downward strain lately from the nonetheless lingering fallout from the pandemic, heightened geopolitical tensions from the struggle in Ukraine and protracted provide chain bottlenecks.

Including to worries is the potential for slowing financial progress in China amid pandemic-prompted lockdowns in main cities, which might harm South Korea’s export-driven economic system.

“It’s worrisome in that destructive impression is rising from the Russia-Ukraine disaster, slowing international financial progress charges, together with China’s,” Hwang Sang-pil, a senior BOK official, stated.

“It nonetheless stays to be seen, on condition that there are nonetheless optimistic facets, equivalent to a rebound in demand for semiconductors and cars that has contracted because of the coronavirus pandemic,” he added.

Final week, the Worldwide Financial Fund minimize its 2022 progress projection for South Korea to 2.5 p.c from a 3 p.c rise predicted in March. The forecast is decrease than the BOK’s estimate of three p.c.

The BOK expects that the three p.c progress estimate for this 12 months could possibly be achieved if the economic system grows at a median of 0.6-0.7 p.c within the remaining quarters.

Final 12 months, South Korea’s economic system grew 4 p.c, the very best progress fee in 11 years, as consumption and exports bounced again from the pandemic-caused droop. (Yonhap)

By Kim Younger-won (wone0102@heraldcorp.com)