South Korea’s Economy Contracts in Q1

South Korea’s economy advanced by 1.8% QoQ in the first quarter of 2026, exceeding the preliminary estimate of 1.7% and rebounding from a downwardly revised 0.1% contraction in the fourth quarter of 2025. It was the strongest GDP growth since the first quarter of 2021, driven by solid exports and resilient domestic demand. Exports grew 5.9%, driven by IT products such as semiconductors, while imports rose at a more moderate pace of 3.9%. Private consumption increased 0.6%, supported by higher spending on both goods and services, while government consumption fell 0.4%. Construction investment climbed 1.4%, as both building construction and civil engineering activity increased. Facilities investment advanced 6.6%, supported by higher spending on machinery and transportation equipment. On a yearly basis, the economy expanded 3.8% in Q1, above the preliminary estimate of 3.6%, and accelerated from 1.6% in Q4 2025, marking the fastest growth since the fourth quarter of 2021.

South Korea’s economy expanded by 1.7% QoQ in the first quarter of 2026, recovering from a 0.2% contraction in the previous quarter, and surpassing the market estimate of 1.0% growth, preliminary data showed. It marked the strongest GDP growth since the first quarter of 2021, driven by solid exports and resilient domestic demand. Exports grew 5.1%, driven by IT items such as semiconductors, while imports rose at a more moderate pace of 3.0%. Private consumption increased 0.5%, supported by higher spending on goods, while government consumption edged up 0.1%, also driven by increased goods spending. Construction investment climbed 2.8%, as both building construction and civil engineering activity rose. Facilities investment grew 4.8%, due to higher spending on machinery and transportation equipment. On an annual basis, the economy grew 3.6% in Q1, accelerating from 1.6% in Q4, marking the fastest growth since the fourth quarter of 2021 and exceeding forecasts of 2.7%.

South Korea’s economy contracted by 0.2% QoQ in the three months to December 2025, compared with an earlier estimate of a 0.3% contraction and reversing a 1.3% expansion in Q3. It marked the first quarterly contraction since the first quarter of 2025, driven by softer domestic demand and a decline in non-semiconductor exports. Private consumption rose 0.3%, as spending on services increased while expenditures on goods declined. Government consumption grew 1.3%, supported by higher spending on health care benefits. Construction investment fell 3.5%, as both building construction and civil engineering activity declined. Facilities investment dropped 1.7%, led by lower spending on transportation equipment. Exports decreased 1.7%, weighed down by declines in motor vehicles and machinery & equipment. Imports fell 1.5%, reflecting lower purchases of natural gas and motor vehicles. On an annual basis, the economy expanded 3% in Q4, exceeding forecasts of 2.5%.