Containers await export in the Port of Busan. (Yonhap)
Korea’s central bank reports that the economy saw 0.6% of real, seasonally adjusted growth in the second quarter.Given the base effect of 1.8% growth in the first quarter, the rate was higher than initially expected.Second-quarter growth continues to be largely driven by robust exports in the semiconductor sector.According to the Bank of Korea’s preliminary estimate, released on Thursday, of Korea’s real gross domestic product (GDP) in the second quarter, the economy expanded 0.6% from the previous quarter and was up 3.7% from the same period a year earlier.The preliminary figures exceeded market expectations.In its economic outlook back in May, the central bank had projected growth of 0.2% quarter on quarter and 3.0% year on year.In the first quarter, real GDP had grown 1.8% from the previous quarter and 3.8% from a year earlier.With growth exceeding earlier projections for two consecutive quarters, expectations are growing that South Korea’s annual growth forecast could be revised upward. The BOK previously forecast an annual growth rate of 2.6%, while the Ministry of Economy and Finance projected 3.0% growth.A stronger growth outlook could strengthen arguments in favor of raising the benchmark interest rate.Real gross domestic income (GDI), which adjusts GDP for changes in trade conditions, also maintained its strong upward trend. GDI rose 3.6% from the previous quarter, following an 8.7% increase in the first quarter. Compared with a year earlier, it jumped 15.6%, marking the largest increase in more than 38 years — the record being a 16.4% leap in the first quarter of 1988.The sharp rise in GDI was largely attributed to improved terms of trade, particularly higher export prices for semiconductors. Unlike GDP, which measures the amount of goods and services produced, GDI reflects changes in real purchasing power by incorporating the impact of fluctuations in export and import prices.Chip exports remained the main driver of growth in the second quarter. Overseas shipments increased 1.4% from the previous quarter and 9.0% year over year, led by semiconductors, as well as machinery and equipment. Imports also rose 0.8% quarter on quarter and 6.3% year on year, driven by higher demand for automobiles, machinery and equipment.By Kim Young-bae, senior staff writerPlease direct questions or comments to [english@hani.co.kr]
