The South Korean economy grew slower than earlier forecast in the first quarter as consumer spending remained subdued and export growth slowed amid the yen's slide to the won, the central bank said Friday.
Korea's gross domestic product (GDP), the broadest measure of economic performance, grew a revised 0.8 percent in the January-March period from three months earlier, down from a previous estimate of 0.9 percent on-quarter expansion, according to the Bank of Korea (BOK).
The first-quarter reading marked the fastest growth since the first quarter of 2012 and quickened from 0.3 percent on-quarter growth in the fourth quarter. The GDP advanced 1.5 percent on-year in the first quarter, the same pace as earlier estimated.
The government is ramping up efforts to bolster the economy, which the yen's slide threatens to weigh on. The yen has depreciated more than 14 percent per the U.S. dollar so far this year, putting Korean exports at a disadvantage in pricing in overseas markets. The won has advanced some 11 percent against the yen so far this year.
The government, which has drawn up an extra budget of 17.3 trillion won (US$15.5 billion), forecast the Korean economy to grow
2.3 percent this year. The BOK's 2013 growth estimate stood at 2.6 percent.
In May, the BOK surprised the market by making the first rate cut in seven months, a move aimed at lending support to the government's drive for the economic stimulus. The central bank lowered the borrowing costs in July and October last year.
Exports, which account for about 50 percent of the economy, grew 3 percent on-quarter in the first quarter, less than its earlier estimate of 3.2 percent. But the first-quarter data was compared with a 1.1 percent contraction in the fourth quarter.
Domestic demand fell 0.4 percent last quarter, compared with a previous estimate of a 0.3 percent contraction, according to the central bank.
Facility investment gained 2.6 percent, down from an earlier estimate of 3 percent growth. Construction investment grew 4.1 percent, higher than the previous estimate of a 2.5 percent gain.
Meanwhile, the gross national income (GNI), a gauge of purchasing power of the population, rose 0.8 percent on-quarter in the first quarter, picking up from 0.3 percent in the previous quarter and the fastest growth in three quarters, it said.
Korea's trade terms improved last quarter as import costs fell at a sharper pace than export prices, the central bank said. (Yonhap News)
