Growth in the fourth quarter of last year was 1.1%, better than expected
Construction investment private investment plus ‘conversion’
Photo = Getty Images Bank.
Korea’s economic growth rate last year was tentatively estimated at 4.0% compared to the previous year. It is the highest level since 2010 and has returned to pre-COVID-19 levels.
According to the ‘Fourth Quarter of 2021 and Annual Real Gross Domestic Product’ announced by the Bank of Korea on the 25th, the annual real real gross domestic product (GDP) increased by 4.0% compared to the previous year. While private consumption and exports turned to increase, facility investment and government consumption continued to increase. By economic activity, the manufacturing and service sectors turned to increase, but the construction sector continued to decline. Real gross domestic income (GDI) increased by 3.0% compared to the previous year. Real GDP growth was lower than expected due to deterioration in terms of trade caused by rising oil prices.
This is thanks to the strong performance in the fourth quarter of last year. GDP growth in the fourth quarter of last year increased by 1.1% compared to the previous quarter, the highest since the first quarter of last year (1.7%). This is due to the fact that construction investment and private investment turned positive while exports improved significantly.
Earlier, the Bank of Korea predicted that the annual growth rate of 4% could be achieved if the GDP growth rate in the fourth quarter of last year exceeded 1.04% compared to the previous quarter. The quarterly growth rate of last year showed a slowing trend in the first quarter (1.7%), the second quarter (0.8%), and the third quarter (0.3%). In particular, the growth rate in the third quarter of last year was severely hit by private consumption and investment due to the COVID-19 mutant virus and global supply bottlenecks. The 0.3% growth rate in the third quarter is the lowest level since the second quarter of 2020 (-3.2%), which recorded negative growth due to COVID-19.
By spending item in the fourth quarter of last year, exports increased by 4.3% compared to the previous quarter. The increase was mainly driven by semiconductors, coal and petroleum products. This is the highest since the fourth quarter of 2020 (5.3%). During the same period, imports increased by 4.3% due to an increase in crude oil and chemical products, the highest since the third quarter of 2020 (5.9%).
Construction investment increased by 2.9% as both building construction and civil engineering construction increased. It is the highest since the fourth quarter of 2020 (3.5%). Private consumption increased by 1.7% as service consumption increased. This is the highest since the second quarter of last year (3.6%).
By economic activity, the increase in manufacturing and service sectors expanded, while the construction sector turned to an increase. The manufacturing sector rose 1.1 percent from the previous quarter, the highest since the first quarter of last year (3.8 percent). The service sector also increased by 1.3%, the highest since the second quarter of last year (2.1%).
The growth rate of real gross domestic income (GDI) decreased by 0.5% compared to the same period last year, recording the lowest level since the second quarter of last year (-0.5%). Although real gross domestic product (GDP) increased by 1.1%, it was the result of worsening terms of trade.
Eunbit Koh, reporter at Hankyung.com silverlight@hankyung.com
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