South Korea's economy grows at 3.0% in Q1 2023

South Korea's economy grew at 3.0% in Q1 2023, the fastest pace in two years. The growth was driven by strong exports and investment.

Exports grew by 12.2% in Q1, from a year earlier. This was the fastest pace of export growth since Q3 2018. Exports of semiconductors and automobiles were the main drivers of export growth.

Investment grew by 10.6% in Q1, from a year earlier. This was the fastest pace of investment growth since Q4 2018. Investment in machinery and equipment was the main driver of investment growth.

Private consumption grew by 2.8% in Q1, from a year earlier. This was the slowest pace of private consumption growth since Q4 2021.

The government expects the economy to grow by 3.0% in 2023. This is the same growth forecast as in the previous quarter.

Key Highlights

• South Korea's economy grew at 3.0% in Q1 2023, the fastest pace in two years.

• The growth was driven by strong exports and investment.

• Exports grew by 12.2% in Q1, from a year earlier.

• Investment grew by 10.6% in Q1, from a year earlier.

• Private consumption grew by 2.8% in Q1, from a year earlier.

• The government expects the economy to grow by 3.0% in 2023.

Analysis

The strong growth in Q1 is a positive sign for the South Korean economy. The economy is expected to continue to grow in 2023, albeit at a slower pace than in recent years. The government has set a growth target of 3.0% for 2023, and it is expected to achieve this target.

The strong growth in Q1 was supported by a number of factors, including:

• The continued recovery in global demand.

• The easing of supply chain disruptions.

• The government's stimulus measures.

The government's stimulus measures, which were announced in December 2022, are expected to provide further support to the economy in the coming months. These measures include tax cuts, subsidies, and loans.

The main risks to the outlook for the South Korean economy are:

• The ongoing war in Ukraine.

• The rising inflation.

• The tightening of monetary policy in the United States.

The government is closely monitoring these risks and is taking steps to mitigate them.