Economic Growth Ratio At 5.7 Percent in the 1st Quarter

Economic growth rate marked at 5.7 percent in the 1st quarter (January to March) of this year, which is higher than expected.

In the report `GDP in the 1st quarter, ` the Bank of Korea announced, “GDP in the 1st quarter increased 5.7 percent year-on-year, as the investment into construction and private consumption led the growth. ” The Bank of Korea have predicted the growth rate in the 1st quarter at 4.7 percent.

And the Bank of Korea explained that economy grew 1.8 percent from the previous quarter (reflecting seasonal causes) that business is recovering rapidly.

The central bank announced that Gross Domestic Income (GDI), which reflects the sentiment of economic subjects like individuals and enterprises on business, increased 7.1 percent from the same period in the last year due to the fall of crude oil.

Chung Chung-ho, director general of the central bank`s economic statistics division said, “business is likely to improve actively from the second half of this year, as real GDI precedes the real business by 3 to 12 months. ”

The Bank of Korea explained that in addition to the 5.7 percent growth, exports contribution ratio to economy turned to plus from minus that the worries about the `excessive reliance on consumer spending` might be eased. Increasing rate of GDP, a Quantitative indicator of economic recovery, had slowed down marking 3.4 percent – 2.9 percent – 1.9 percent in the last year, but jumped over the estimate in the 1st quarter after soaring by 3.7 percent in the fourth quarter of last year due to the increase of stock prices.

The Bank of Korea explained that construction business improved by 8.9 percent and investment in construction increased 10.1 percent numerically proving last year’s `boom of real estate`. On the contrary, facility investment increased only 3.2 percent lower than average growth rate.

Director general Chung forecasted, “growth rate would not decrease in the second quarter through the special procurements by World Cup Games, though there are uncertainties in exports due to the decrease of won-dollar exchange rate and in the economy of family and enterprises due to the rise of interest rate. ”

Seung-Ryun Kim srkim@donga.com