Business News Asia
South Korea’s economy contracted for the first time in two and a half years in the fourth quarter of 2022, according to the Bank of Korea (BOK). The decline was due to a decrease in post-COVID-19 spending and a drop in exports.
The country’s gross domestic product (GDP) contracted by 0.4% in the fourth quarter, compared to a 0.3% expansion in the previous quarter. This contraction was unexpected, as economists had predicted a 0.3% decline.
The main factors contributing to the contraction were a 5.8% decrease in exports and a 0.4% drop in private consumption. Government spending, however, rose by 3.2%.
In comparison to the previous year, GDP growth in the fourth quarter of 2022 was 1.4%, which is below the forecast of 1.5% and lower than the 3.1% year-on-year growth in Q3/2022.
The BOK estimates that South Korea’s economy grew by 2.6% in 2022, compared to 4.1% growth in 2021. The average annual growth rate between 2017 and 2021 was 2.3%.
The BOK had previously forecast a 1.7% GDP growth for 2023, but warned that this prediction may be revised downward.