Recent figures from the Bank of Korea, released on Tuesday, show that GDP grew by 1.8% from January to March compared to the previous quarter, slightly above the earlier estimate of 1.7%. This marks the fastest quarterly growth rate since the fourth quarter of 2021.
A Bloomberg Report indicated that enhanced infrastructure investment and robust private consumption were key factors in the upward revision, while soaring semiconductor shipments contributed to a 5.9% rise in exports compared to the last quarter.
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This data supports the notion that South Korea’s economy continues to benefit from the global AI boom. SK Hynix Inc. reported a five-fold surge in quarterly earnings coinciding with the BOK’s initial GDP estimate in April, highlighting the strength of demand driven by rising memory-chip prices.
With increases in both goods and services spending, private consumption rose by 0.6% and facilities investment went up by 6.6%, both revised upward from previous estimates. On the other hand, government spending fell by 0.4%, while construction investment increased by 1.4%.
In a separate announcement, the BOK revised its economic growth forecast for 2025, indicating that real GDP had expanded by 1.1% last year, up from a prior estimate of 1%.
The board’s dot plot projections for the benchmark rate suggested it could reach as high as 3.25% within the next six months, although two board members expressed dissenting views favoring a rate hike last month.
Shin remarked that the usual trade-offs complicating monetary policy decisions are diminishing, as inflation, growth, the exchange rate, and housing-related financial risks are aligning in a consistent direction.
(Edited by : Juviraj Anchil)
