The Bank of Korea announced on June 4 that Korea’s real GDP is estimated to have increased by 0.8 percent quarter on quarter in the first quarter of this year.
The real GDP growth rate had been at 1.1 percent in the first quarter of 2014 but more than halved to 0.5 percent in the second, led mainly by the sluggish domestic consumption that followed the Sewol ferry disaster in April. The figure edged up to 0.8 percent in the third quarter but dropped back to 0.3 percent in the last quarter of 2014.
This can be attributed to today’s poor export trade performance. According to the Korea Development Institute (KDI), Korea’s year-on-year export growth rate on a customs clearance basis went up from 1.6 percent to 3.2 percent and then to 3.6 percent in the first to third quarters of last year but nosedived to 0.9 percent and negative 2.9 percent in the following quarters.
Economists’ consensus is that the low growth is likely to continue for a while and the government will fail to meet its 3.8 percent goal for this year. On June 3, the OECD adjusted its Korean economic growth forecast for this year from 3.8 percent to 3.0 percent. The Middle East respiratory syndrome coronavirus (MERS-CoV) is highly likely to affect the Q2 growth rate as well. Not a few experts point out even 3.0 percent could be a tall order.