The crisp increase in corporate investment drove South Korea’s economy growth by 1.6 percent in the first quarter of 2021.
Corporate investment, specifically in facilities, private consumption and government spending, is the huge factor for the quick expansion in the three months of the year, the Bank of Korea said.
In a Reuters poll of economists, the median forecast was for 1.2 percent growth.
Last year, South Korea recorded a first-ever drop on its economy due to the global health crisis. It followed the fall of the economy recorded during the Asian financial crisis in 1997 to 1998.
The contraction was however constricted by the fairly prosperous management of the health crisis and fortified exports.
The rate was considered better as compared with the United State, the United Kingdom, and Japan. This, despite that the contraction last year was extraordinary as main economies dropped as well.
In 2020, South Korea’s main trading partner, China, recorded an expansion of 2.3 percent. It recently stated that it saw an 18.3 percent step-up during the first three months this year.
South Korea was not spared from the damage of the pandemic but like other East Asian countries, it saw fewer virus cases and deaths as compared to other parts of the world.
The country’s officials have settled applying restrictions based on the fluctuation in virus cases.
According to economists, the economy this year will bounce back to growth despite that consumer spending may not match the same speed, as strong investment and exports are expected.
Semiconductors, automobiles and petrochemicals will lift the sectors by 6 percent, according to the forecast of Korea International Trade Association.
This year, the country’s government anticipated the increase of GDP by 3.2 percent.
Based on BOK Gov. Lee Ju-yeol, the country’s growth rate this 2021 will probably exceed the recent anticipation. Lee said it can attain the middle 3 percent limit.
The central bank in late April released its projection of 3 percent expansion of the local economy. It said consumer prices will rise by 1.3 percent.
Pending the announcement of the adjusted growth forecast of BOK in May, an official from BOK stated that there is increased probability of the central bank boosting its expectation to match with lively exports and investment, as well as accumulated stimulus from America and the impact of the extra fund of South Korea.
However, South Korea, which shared the same situation with Japan, is concerned with the new COVID-19 infections following the spread of virus variants and the delayed pace of the vaccination campaign.