South Korea’s economy barely avoids recession amid rocky outlook

Asia’s fourth-largest economy grows 0.3 percent during first quarter amid improvements in exports and consumption.

A truck driver stands next to his truck as he gets ready to transport a shipping container at Pusan Newport Terminal in Busan, South Korea.
South Korea's economy narrowly avoided recession in the first quarter of 2023 [File: Kim Hong-Ji/Reutes

South Korea’s economy has barely avoided recession amid challenging global economic conditions for Asia’s fourth-largest economy.

South Korea’s gross domestic product (GDP) grew 0.3 percent during January-March, government figures showed on Tuesday, rebounding from a 0.4 percent contraction in the final quarter of 2022.

A recession is typically defined as two consecutive quarters of negative growth.

The rebound came as the country’s exports rose compared with the previous quarter and domestic demand improved.

Private consumption was the biggest growth driver, expanding 0.5 percent, while exports rose 3.8 percent, after falling 4.6 percent the previous quarter.

“Given consumption for leisure and tourism services was particularly strong, we think the reopening boost has continued,” Min Joo Kang, senior economist for South Korea and Japan at ING, said in a note.

“Inflation came down rapidly from last year’s peak and market interest rates also stabilised as the BoK [Bank of Korea] has paused its rate increases since January. These factors probably boosted consumption last quarter.”

Still, South Korea’s economy is widely expected to slow down this year amid a challenging outlook for the global economy.

The OECD expects South Korea’s economy to grow 1.6 percent in 2023, after last month revising down its estimate from 1.8 percent.

South Korea’s economy grew 2.6 percent in 2022, slowing from 4.1 percent in 2021.

Source: Al Jazeera and news agencies