South Korea's economy continued its growth in the second quarter of this year, driven by strong semiconductor exports. The real gross domestic product (GDP) increased by 0.6%, while nominal GDP surged by 26.4% compared to the same period last year, marking the highest growth rate in 47 years.
The Bank of Korea reported on September 8 that the second quarter's real GDP growth rate (seasonally adjusted) was 0.6%, consistent with the preliminary figure released in July.
Quarterly growth improved after a contraction of -0.2% in the first quarter of last year, with growth rates of 0.6% in the second quarter, 1.4% in the third quarter, and a decline to -0.1% in the fourth quarter. This year, growth has continued with a 1.8% increase in the first quarter followed by the second quarter's growth.
In the second quarter, both exports and private consumption showed positive trends. Exports rose by 1.3%, primarily driven by semiconductors, machinery, and equipment. Imports also increased by 0.7%, fueled by higher imports of automobiles and machinery.
Construction investment fell by 0.1% due to a decline in civil engineering projects, while facility investment increased by 0.2% thanks to growth in machinery and semiconductor manufacturing equipment. Investment in intellectual property products rose by 3.4%, supported by increases in research and development (R&D) and software.
Private consumption grew by 0.4%, bolstered by increased spending on electronics and food and accommodation services. Government consumption also saw a slight increase of 0.1%, mainly due to higher health insurance benefit expenditures.
Compared to the preliminary figures, the growth rates for construction investment and intellectual property product investment were both revised upward by 0.1 percentage points, while government consumption was adjusted downward by 0.1 percentage points.
In terms of contributions to the second quarter's growth rate, net exports (exports minus imports) added 0.3 percentage points to growth. Although imports increased, the rise in exports was more significant. Domestic consumption contributed 0.3 percentage points, with private consumption and intellectual property product investment each contributing 0.2 percentage points. Government consumption, construction investment, and facility investment all recorded contributions of 0.0 percentage points.
Nominal GDP increased by 9.2% from the previous quarter. Year-on-year, it rose by 26.4%, the highest growth rate since the third quarter of 1979, which saw a 27.7% increase. Nominal gross national income (GNI) grew by 8.8% from the previous quarter. Although nominal net income from abroad decreased from 137 trillion won to 120 trillion won, the nominal GDP growth of 9.2% continued to drive increases.
Real GNI increased by 3.1% from the previous quarter. Despite a drop in real net income from abroad from 116 trillion won to 79 trillion won, the improvement in trade conditions led to a significant rise in real trade profits, from 38.7 trillion won to 58.5 trillion won, surpassing GDP growth rates.
The total savings rate reached 45.6%, up 3.9 percentage points from the previous quarter, marking the highest level since statistics began in 1970.
Kim Hwa-yong, head of the Bank of Korea's National Income Division, stated, "While income has increased, consumption has not kept pace, indicating that there is still room for consumption to grow. If corporate income growth translates into household income and leads to increased consumption through remaining savings, it could exert upward pressure on demand-side prices."
He also predicted that the increase in total operating surplus due to strong corporate performance would eventually lead to higher household income through bonuses and dividends, as well as increased government revenue from corporate taxes, income taxes, and dividend taxes, which would gradually boost domestic demand. He noted that the distribution of corporate income to the government and households through Samsung Electronics' cash dividends and dividend taxes would become increasingly visible starting in the second half of this year.
This year, the prospect of achieving a national income of $40,000 is becoming more tangible. He remarked, "If there are no unexpected shocks in the remaining months of the year, and if the nominal GNI growth rate remains at the current level with stable exchange rates, the per capita GNI in U.S. dollars is very likely to exceed $40,000."
* This article has been translated by AI.
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