An export fair for small and medium-sized enterprises is underway at COEX in southern Seoul, April 15. Yonhap

The surprise growth of the Korean economy in the first quarter of this year appears not to be felt by the public, as many households and businesses continue struggling with high inflation, costly borrowing rates and other persistent economic challenges.

Analysts said Friday the discrepancy between the improved gross domestic product (GDP) as a key economic indicator and the public's negative sentiment about the economy comes mainly from growth driven by large businesses.

Under the circumstances, the experts speculated that calls for a supplementary budget will continue to gain ground although the government, citing a need for financial soundness, has repeatedly turned down the calls.

"Only a handful of members of the public and businesses seem to be feeling that the economy is in sunny days," said Jung Ho-chul of Citizens' Coalition for Economic Justice (CCEJ), a civic activist group.

He referred to Korea's GDP for the January-March period, which increased 1.3 percent from the previous quarter on a seasonally adjusted basis as seen in preliminary data by the Bank of Korea (BOK), Thursday.

The outcome was far higher than the government's estimate of 0.6 percent to 0.7 percent.

It also marked the sharpest expansion since the fourth quarter of 2021, when the economy grew 1.4 percent.

Regarding quarter-on-quarter growth by categories, exports expanded 0.9 percent. Private spending rose by 0.8 percent, while construction investment went up 2.7 percent and government spending climbed 0.7 percent.

The Ministry of Economy and Finance assessed that the economy is "finally back to display exemplary growth characterized with even contribution from exports, spending and other relevant factors."

"I do not quite agree with such analysis concerning even contribution," Jung said, pointing out exports were driven by the chip industry, which is dominated by large businesses such as Samsung Electronics and SK hynix.

Contrary to this, smaller firms were less optimistic than larger peers in separate BOK data.

The overall business sentiment index (BSI) for companies was measured at 71 for April, marking a 2-point increase from March. A figure below 100 means pessimists outnumber optimists, while a figure above the benchmark means the opposite.

The index improved by 3 points for conglomerates and by 5 points for export-driven companies. But it shed 1 point for small and medium-sized enterprises (SMEs) and another 1 point for domestic sales-oriented companies.

Labor ministry data showed that the real wage, or wage adjusted for inflation, decreased for the second consecutive year in 2023. The monthly real wage totaled 3.55 million won ($2,500), down 1.1 percent from a year earlier.

In the meantime, inflation stayed above 3 percent against the government's annual target of 2 percent, while the benchmark interest rate has been standing since January 2023 at 3.5 percent, the highest level since December 2008.

The won-dollar exchange rate at one point breached the threshold of 1,400 won per dollar this month, which is the highest since November 2022.

"Not many ordinary households or small businesses are free from these economic burdens, and it is understandable that they are not impressed by the latest GDP growth," said Joo Won, deputy director of Hyundai Research Institute.

He said the government accordingly should be "open to a supplementary budget" although he does not think it is necessary immediately.

The ministry in its argument against a supplementary budget said the government contribution to GDP growth was zero while it was solely based on contributions from the private sector, with private spending growing 0.8 percent.

Sluggish private spending was behind the demand from the main opposition Democratic Party of Korea to budget an extra 13 trillion won.