ⓒYONHAP News

The South Korean economy grew just zero-point-six percent in the first quarter from the previous quarter as a combination of the omicron wave, supply disruptions and the war in Ukraine discouraged consumption and investment.

The Bank of Korea on Wednesday issued a revised quarterly estimate on the country's gross domestic product(GDP) for the January-to-March period, down by zero-point-one percentage point from its earlier projection announced in April.

Although the economy expanded for the seventh consecutive quarter, the latest figure is zero-point-seven percentage points lower than the fourth quarter of last year.

Private consumption declined on-quarter by half a percentage point while facility investment saw the biggest contraction in three years with a three-point-nine percent decrease. Construction investment also fell by three-point-nine percent.

Exports, however, gained three-point-six percent, while imports dropped zero-point-six percent.

Last month, the central bank cut its growth outlook for this year by zero-point-three percentage points to two-point-seven percent. 

Also on Wednesday, the Organization for Economic Cooperation and Development(OECD) sharply raised its inflation outlook for South Korea for this year to nearly five percent, while slashing its growth outlook below three percent.

According to the Ministry of Economy and Finance, the OECD marked down its 2022 economic forecast for the country by zero-point-three percentage points from its earlier forecast to two-point-seven percent.

The organization cut the growth outlook for next year as well to two-point-five percent from its earlier forecast of two-point-seven percent.

The OECD raised its inflation outlook for this year to four-point-eight percent, two-point-seven percentage points higher than its earlier projection of two-point-one percent.

The latest outlook is higher than the projections by the Bank of Korea and the International Monetary Fund.

The revised estimate would mark the steepest rise since 1998, when it posted seven-point-five percent due to the foreign currency crisis.

On the global economic front, the World Bank on Tuesday significantly slashed its global growth forecast for this year as it warned of a serious stagflation period unseen since the 1970s.

In its latest outlook, the institution forecast the global economy will grow two-point-nine percent this year, marking a downward revision from four-point-one percent announced in January.

Listing Russia’s war on Ukraine, China’s containment policy for COVID-19, supply chain disruptions and a stagflation risk as contributors to downward pressure on the economy, the World Bank said economic recession would be difficult to avoid in many countries.

It expressed particular concerns over stagflation, or high inflation combined by depression, reminiscent of the oil crisis in the 1970s.

The World Bank has projected global economic growth to slow by two-point-seven percentage points between 2021 and 2024, more than twice the deceleration between 1976 and 1979.