South Korea Economy Unexpectedly Shrinks in Q1

The South Korean economy shrank 0.3 percent quarter-on-quarter in the three months to March 2019, after a 1.0 percent expansion in the previous three months and missing market expectations of 0.3 percent growth, advanced data showed. It was the first contraction in five quarters and the steepest since the last quarter of 2008, as utilities and manufacturing contracted sharply and construction shrank for the third time in over the last four quarters.

On the production side, output contracted for utilities (-7.3 percent from 3.6 percent in Q4 2018) and manufacturing (-2.4 percent from 0.9 percent). Also, construction output dropped 0.4 percent, after growing 1.0 percent in the prior quarter and agriculture, forestry & fishing advanced 4.7 percent, slowing from a 6.1 percent rise. In contrast, services activities expanded 0.9 percent, accelerating from 0.6 percent growth in the last quarter of 2018. 

On the expenditure side, final consumption went up 0.2 percent, easing from a 1.5 percent growth in Q4 2018, as both private (+0.1 percent vs +1.0 percent) and public spending (+0.3 percent vs +3.0 percent) slowed. Additionally, gross fixed capital formation plummeted 2.8 percent, after growing 1.9 percent in the previous quarter, mainly dragged by a 10.8 percent plunge in facilities. Meantime, exports declined 2.6 percent (vs -1.5 percent) and imports decreased 3.3 percent (vs 1.5 percent).

On an annual basis, the economy advanced 1.8 percent year-on-year, decelerating from a 3.1 percent growth in the previous quarter and well below market forecasts of a 2.5 percent expansion, advanced data showed. It was the weakest growth rate since the third quarter of 2009.

South Korea Economy Unexpectedly Shrinks in Q1

Bank of Korea | Mario |
4/25/2019 10:44:30 AM