South Korea's Q2 GDP Rises 0.6%, Exceeding Forecasts

The gross domestic product (GDP) for the second quarter announced by the Bank of Korea on the 23rd increased by 0.6% from the previous quarter, significantly surpassing market expectations (0.2%).

Exports and domestic demand drove the economic growth in the second quarter. Q2 exports, led by semiconductors and machinery and equipment, increased by 1.4% from the previous quarter, while imports expanded by 0.8% due to increases in automobiles and machinery and equipment. As the rise in exports outpaced imports, net exports boosted the overall growth rate by 0.3 percentage points (p), while domestic demand contributed 0.3p.

Private consumption increased by 0.4% as spending on goods such as home appliances and services like food and accommodation rose together. Government consumption grew by 0.2%, led by health insurance benefit expenditures. Facility investment increased by 0.2%, centered on machinery such as semiconductor manufacturing equipment, while construction investment decreased by 0.2% due to sluggish civil engineering. Investment in intellectual property products rose by 3.3%.

Real gross domestic income (GDI) for the second quarter increased by 3.6% from the previous quarter and by 15.6% year-on-year. The manufacturing sector grew by 1.2%, led by computers, electronics, and optical instruments, while the service sector increased by 1.1%. The construction sector shrank by 1.9% due to sluggish civil engineering, and the electricity, gas, and water supply sector declined by 1.3%. Agriculture, forestry, and fisheries contracted by 7.1%, led by crop cultivation and fishing.

Bank of Korea Governor Rhee Chang-yong stated that the bank will examine both Q2 GDP and real GDI trends in the process of determining the future base rate.