South Korea’s economy grew a stronger-than-expected 1.7 percent in the first quarter from three months earlier, supported by solid semiconductor exports and a rebound in investment, the Bank of Korea said Thursday.
The reading exceeded the central bank’s 0.9 percent projection and marked the fastest quarterly expansion in five and a half years, rebounding from a 0.2 percent contraction in the final quarter of last year.
Exports rose 5.1 percent on-quarter, led by chips, while imports gained 3 percent. Investment, which had weighed on growth in the previous quarter, recovered, with construction rising 2.8 percent and facility investment increasing 4.8 percent.
The strength in semiconductors was underscored by record-breaking earnings from South Korean chipmakers. SK hynix said Thursday operating profit surged 405 percent in the first quarter on strong demand for artificial intelligence memory chips, while sales reached an all-time high, extending a streak of record performance.
The BOK data shows private consumption in South Korea edged up 0.5 percent in the first quarter, while government spending rose 0.1 percent, pointing to a modest improvement in domestic demand.
Net exports contributed 1.1 percentage points to overall growth, with domestic demand adding 0.6 percentage points.
Real gross domestic income, a broader measure of purchasing power, jumped 7.5 percent from a quarter earlier — the fastest increase since 1988 and well above the pace of output growth.
The data point to a near-term rebound, though the outlook remains tied to the strength of the global technology cycle and external demand.
The central bank in February projected the economy would grow 2.0 percent this year. The International Monetary Fund recently put its estimate at 1.9 percent, while the Organization for Economic Cooperation and Development forecast 2.1 percent.
milaya@heraldcorp.com
