Korea's Gross Domestic Product (GDP) showed a decrease of 0.2% in the first quarter of this year. This matched the previously announced preliminary figure. With consumption, exports, and investment all decreasing, it marked a downturn after three quarters of growth. Notably, construction investment has decreased for four consecutive quarters, failing to escape from prolonged stagnation.
However, as the income earned by Korean nationals abroad increased, the real Gross National Income (GNI) rose by 0.1% compared to the previous quarter. Last year's per capita GNI was $36,745, an increase of 1.5% from the previous year, marking the third year of growth since 2022.
According to the '2025 first quarter national income (provisional)' report released by the Bank of Korea on the 5th, the real GDP in the first quarter decreased by 0.2% compared to the previous quarter, matching the preliminary figure announced in April. The quarterly GDP has shown growth of 0.1% in the third and fourth quarters after contracting by 0.2% in the second quarter of last year, but it has once again turned to a decline after three quarters.
However, as a result of additional statistics that were not reflected in the previous preliminary figures, the extent of the decrease in exports and imports was reduced. Exports fell by 0.6% and imports by 1.1%, compared to preliminary figures of -1.1% and -2.0%, respectively, showing a 0.5 percentage point (p) reduction in exports and a 0.9 p decrease in imports. The decline in exports was led by decreases in chemical products and machinery and equipment, while imports fell primarily in energy-related sectors.
Investment in facilities also showed significant fluctuations. Facility investment decreased by 0.4%, which is an upward adjustment of 1.7 percentage points compared to the preliminary figure of -2.1%. This decline was primarily led by machinery for semiconductor manufacturing. However, construction investment experienced a 3.1% decrease, which was similar to the preliminary figure of -3.2%. Construction investment has been declining for four consecutive quarters since the second quarter of last year, showing poor performance in building construction.
Consumption was similar to the preliminary figures. Private consumption decreased by 0.1%, matching the preliminary figure, while government consumption remained stable, improving compared to the preliminary figure of -0.1%. While private consumption saw increases in goods like communication devices, services in entertainment and culture saw a decline. Government consumption decreased in health insurance expenditure, but increased expenditure on goods maintained the level of the previous quarter.
Nominal GDP was recorded at 647.2 trillion won, a decrease of 0.4%. The GDP deflator, which indicates the overall price level, rose by 2.4% over the year. The GDP deflator is a comprehensive price index that divides nominal GDP by real GDP, encompassing all price factors affecting national income.
The total savings rate dropped to 34.9%, down 0.4 percentage points compared to the previous quarter. The growth rate of the gross disposable income (0.1%) lagged behind the growth rate of final consumption expenditure (0.7%), leading to a decrease. The domestic investment rate fell to 28.9%, a decline of 0.8 percentage points from the previous quarter. The foreign investment rate rose to 6.0%, an increase of 0.4 percentage points compared to the previous quarter.
The real Gross National Income (GNI) for the first quarter this year was recorded at 572 trillion won. This was a 0.1% increase compared to the previous quarter, exceeding the real GDP growth rate. GNI represents the total income earned by all nationals from domestic and foreign engagements, including wages, interest, and dividends, reflecting real purchasing power.
Due to deteriorating trade conditions, the real trade loss expanded from 10.8 trillion won in the last quarter of last year to 13 trillion won in the first quarter of this year. However, the real net income from foreign sources (income earned by nationals abroad minus income earned by foreigners in Korea) increased from 8.9 trillion won in the last quarter of last year to 13 trillion won in the first quarter of this year, leading to an increase in real GNI.
According to the '2023 national accounts (final) and 2024 national accounts (provisional)' announced on the same day, last year's real GDP growth rate was 2.0%, unchanged from previous estimates. Nominal GDP tallied at 2,556.9 trillion won, an increase of 6.2% compared to the previous year. In U.S. dollar terms, it was recorded at $1.8746 trillion, growing by 1.6%.
Last year, the per capita GNI was $36,745 (5,012,000 won), marking increases of 1.5% in U.S. dollar terms and 6.1% in won. The per capita household disposable income (PGDI) increased by 0.9% to $20,339 (approximately 27,742,000 won). The GDP deflator rose by 4.1% from the previous year, while the total savings rate was recorded at 34.8%, and the domestic investment rate was 29.6%.