SEOUL :South Korea’s economy unexpectedly contracted in the first quarter as exports and consumption stalled, advanced central bank estimates showed on Thursday, amid fears over the impact of U.S. President Donald Trump’s aggressive protectionist policies.
Gross domestic product (GDP) contracted 0.2 per cent from a quarter earlier on a seasonally adjusted basis, shrinking for the first time since the second quarter of 2024 and missing a gain of 0.1 per cent forecast in a Reuters survey.
The weak data will increase calls for the Bank of Korea to cut interest rates again as soon as next month as policymakers worry about the consequences of Trump’s tariff policies, which some analysts fear may tip one of the world’s most trade-reliant economies into a downward spiral.
A breakdown of Thursday’s data showed construction investment dropped 3.2 per cent from the preceding quarter, while capital investment and exports declined 2.1 per cent and 1.1 per cent, respectively.
Private consumption declined 0.1 per cent in the January-March period after gaining 0.2 per cent three months earlier.
On an annual basis, the economy contracted 0.1 per cent, also weaker than an expansion of 0.1 per cent seen in the poll and down sharply after growing 1.2 per cent in the previous quarter.
In 2024, Asia’s fourth-largest economy grew 2.0 per cent, after rising 1.4 per cent in 2023, according to the Bank of Korea.
