People stand in line to check out at a discount chain store in Seoul, Thursday. (Yonhap)

South Korea’s economy expanded at the fastest clip in more than two years in the first quarter as private spending and exports picked up, the central bank said Thursday.

The country's real gross domestic product grew 1.3 percent on-quarter in the January-March period, accelerating from a 0.6 percent expansion in the fourth quarter last year, according to an advance estimate from the Bank of Korea.

The latest GDP figure is a significant improvement from the past eight quarters, during which figures have stayed below 1 percent, since last reaching 1.4 percent growth in the fourth quarter of 2021.

On-year, Asia’s fourth-largest economy grew 3.4 percent in the first quarter, the largest on-year expansion since the 4.3 percent of the fourth quarter of 2021.

Calling the Q1 GDP data “a clear green light” that the economy is “returning to the growth path,” the Ministry of Economy and Finance said further economic expansion is expected as “exports continue to improve and domestic demand recovery gradually grows.”

In the first three months, private consumption rose by 0.8 percent, as expenditures on goods such as clothing and services including restaurants and accommodation increased.

Exports expanded by 0.9 percent, as exports of IT items, such as cellular phones, increased. Imports contracted by 0.7 percent, owing to decreased imports of electronic equipment, according to the BOK.

“Domestic consumption is expected to recover as constraints such as prices are eased amid the gradual spread of strong exports to corporate performance and household income,” the ministry said in a statement.

The stronger-than-expected quarterly economic growth gives the government to raise its 2.2 percent projection for this year.

“It is possible that the government's forecast from early this year will be exceeded considering the strong performance in the first quarter and the upgraded outlook of major institutions,” the finance ministry said.

IMF and JP Morgan revised up their 2024 growth outlook for Korea from 2.2 percent to 2.3 percent, in January and April, respectively. UBS also raised its forecast to 2.3 percent in April from 2.0 percent it previously projected.

Government consumption grew by 0.7 percent, as expenditures on goods increased.

Construction investment expanded by 2.7 percent, as building construction and civil engineering both increased. Facilities investment fell by 0.8 percent, driven by decreased transportation equipment.

On the production side, agriculture, forestry and fishing fell by 3.1 percent, led by a decrease in crop yields.

Manufacturing was up by 1.2 percent, mainly due to increases in chemical products and transportation equipment.