South Korea’s GDP Growth Slows in Q1 2022

The South Korean central bank announced today that South Korea’s gross domestic product (GDP) grew by only 0.7% quarter-on-quarter in the first quarter of 2022. This slowed from the 1.2% growth in Q4/21 as consumption and investment continued to be affected by the COVID-19 outbreak and uncertainty caused by the war between Russia and Ukraine.

There are a high number of confirmed cases of COVID-19 in South Korea, and the number of cases has jumped since the beginning of the year due to the rapidly spreading Omicron strain. People are avoiding outside activities, leading to a slowdown in consumer spending.

South Korean consumer spending fell 0.5% in the first quarter after consumers cut back on spending on leisure, travel, and restaurant visits.

Construction investment fell by 2.4% and infrastructure investment by 4% in the first quarter.

The International Monetary Fund (IMF) has lowered its forecast for South Korea’s economic growth in 2022 to 2.5% from 3% previously.

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