* S.Korea Q1 GDP s/adj +1.6% Q/Q (Reuters poll +1.0%) -BOK
* Capital investment, exports drive Q1 recovery
* Analysts see economy growing at fastest annual pace in a decade (Adds details, context)
SEOUL, April 27 (Reuters) – South Korea’s economic recovery beat expectations in the first quarter, extending the country’s export-led recovery and as the government maintained support for ailing small businesses.
Gross domestic product (GDP) grew a seasonally adjusted 1.6% in the March quarter from three months earlier, the Bank of Korea said on Tuesday, faster than the median estimate of a 1.0% growth in a Reuters poll and following a 1.2% expansion in the December quarter.
Asia’s fourth-largest economy has continued to gain momentum after shrinking 1.0% last year, its worst contraction since 1998, driven by smokestack industries such as chip and electronic manufacturing, mostly for exports.
GDP expanded 1.8% year-on-year in the January-March period after shrinking a revised 1.2% three months earlier, also beating an expected expansion of 1.1%.
Growth was driven by exports and facility investment, which rose 1.9% and 6.6% quarter-on-quarter, respectively.
Private consumption grew at a slower 1.1% on-quarter, after shrinking 1.5% in the previous three months.
In early April, South Korea stepped up restrictions amid fears of a potential fourth wave of COVID-19 outbreaks, with daily cases hitting three-month highs and the vaccination rate staying at just above 4%.
The low rate compares with a 42% in the United States.
The BOK flagged surging coronavirus cases as fresh downside risks to growth earlier this month, though it saw robust exports and a pick-up in consumption continuing to power the economy.
BOK Governor Lee Ju-yeol said earlier in April that “mid-3%” growth was “very possible” this year, up from a previous forecast for 3% growth in 2021.
A Reuters poll on Friday showed economists expect South Korea’s economy to expand 3.4% this year, its fastest annual growth in a decade. (Reporting by Cynthia Kim, Joori Roh; Editing by Kim Coghill and Sam Holmes)
