Government: Policy Measures Made a Major Contribution to Q1 GDP; Q2 Adjustment Unavoidable

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[The Financial News] Koo Yun-cheol, Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance, said on the 23rd that the sharp rebound in South Korea's gross domestic product (GDP) growth in the first quarter of this year was also largely driven by policy measures introduced after the government took office.
\r\nAt a meeting of the Ministerial Task Force on Special Management of Consumer Prices held that morning at Government Complex Seoul, Koo said that, in addition to strong exports fueled by the semiconductor boom, measures to boost the capital market and support consumption also contributed.
The Bank of Korea's preliminary estimate of real GDP growth for the first quarter, released that day, came in at 1.7% quarter on quarter, the highest level in five years and six months since the third quarter of 2020, when growth reached 2.2%.
Koo said that a swift response to the Arab-Israeli conflict also helped. He added that the Korea Development Institute (KDI) had also given a positive assessment of the government's policy response the previous day, saying the oil price cap system lowered consumer prices by as much as 0.8 percentage point and that no contraction in consumption was observed.
On GDP growth, the government said that in the second quarter, the base effect from the sharp first-quarter expansion and the full impact of the Arab-Israeli conflict would overlap, making a quarter-on-quarter adjustment unavoidable. It added that the annual growth outlook needs to be monitored further given high external uncertainty, including the course of the conflict.
Earlier this year, the government projected a 2.0% growth rate for 2025 in its economic growth strategy. Byunghee Yoo, Director-General for Economic Policy at the Ministry of Economy and Finance, said that the impact of the conflict in the second quarter could be offset to some extent by the strong semiconductor cycle and government policy measures, so it remains to be seen how this will affect actual growth.
Yoo said that first-quarter growth was broad-based across sectors. He also noted that the high contribution from the private sector was another notable feature.
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syj@fnnews.com Seoyoung Jun Reporter