South Korea economy unexpectedly contracts in first quarter, worst since global financial crisis

April 24, 2019

SEOUL (Reuters) – South Korea’s economy unexpectedly shrank in the first quarter, marking its worst performance since the global financial crisis, as government spending failed to keep up the previous quarter’s strong pace and as companies slashed investment.

Gross domestic product (GDP) in the first quarter declined a seasonally adjusted 0.3 percent from the previous quarter, the worst contraction since a 3.3 percent drop in the fourth quarter of 2008 and sliding from 1 percent growth in Oct-Dec, the Bank of Korea said on Thursday.

None of the economists surveyed in a Reuters poll had expected growth to contract. The median forecast was for a rise of 0.3 percent.

From a year earlier, Asia’s fourth-largest economy grew 1.8 percent in the January-March quarter, compared with 2.5 percent growth in the poll and 3.1 percent in the final quarter of 2018.

Exports fell 2.6 percent quarter-on-quarter, a sharper drop than the 1.5 percent decline in the previous three months.

Capital investment tumbled 10.8 percent to a 21-year low, while construction investment inched down 0.1 percent, according to the central bank.

(Reporting by Joori Roh, Cynthia Kim; Editing by Kim Coghill)

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