SEOUL (Reuters) -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% 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% 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% from the preceding quarter, while capital investment and exports declined 2.1% and 1.1%, respectively.
Private consumption declined 0.1% in the January-March period after gaining 0.2% three months earlier.
On an annual basis, the economy contracted 0.1%, also weaker than an expansion of 0.1% seen in the poll and down sharply after growing 1.2% in the previous quarter.
In 2024, Asia’s fourth-largest economy grew 2.0%, after rising 1.4% in 2023, according to the Bank of Korea.
(Reporting by Cynthia KimEditing by Ed Davies)
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