South Korea's economy gathered strength in the first quarter on brisk exports, the country's central bank said Wednesday, giving weight to prospects for a rate hike as early as next month.
The country's gross domestic product (GDP), the broadest measure of an economy's performance, expanded 1.4% in the January-March period from three months earlier, compared with a 0.5% on-quarter growth in the fourth quarter of last year, according to an advance estimate by the Bank of Korea (BOK).
Compared with a year earlier, the South Korean economy grew 4.2% in the first quarter, slightly down from an annual 4.7% surge three months earlier.
The quarterly growth rate was lower than a 1.5% expansion estimated by the central bank on April 13, but the on-year growth was better than an earlier projection of 4.1%. According to the central bank, exports, which account for about 50% of South Korea's GDP, gained 3.3% on-quarter in the first quarter after expanding 2.6% three months earlier.
Private spending, one of the main growth engines of the Korean economy, expanded 0.5%, quickening from a 0.3% gain in the preceding quarter.
Facility investment contracted 0.8% after falling 1% in the preceding quarter and construction investment tumbled 6.7% after declining 1% in the fourth quarter.
First-quarter construction investment was at the lowest level since the first quarter of 1998.
The manufacturing industry continued its expansion by growing 3.2% on-quarter in the January-March period.
But the agricultural sector declined 5.1% due to the impact of foot-and-mouth disease, the worst performance since a 14.7% contraction in the first quarter of 1990.
The BOK said oil and vegetable prices, the main drivers of inflation, are widely expected to ease starting in the third quarter, but the underlying upward trend of inflation will continue into next year.