South Korea's economy continued its solid growth momentum in the second quarter of this year, driven by concurrent increases in exports and private consumption.
The Bank of Korea (BOK) announced that the real gross domestic product (GDP) growth rate (compared to the previous quarter, preliminary) for the second quarter was tallied at 0.6%.
This is identical to the flash estimate released on July 23.
After sharply rebounding from -0.1% in the fourth quarter of last year to 1.8% in the first quarter of this year, the quarterly growth rate maintained a favorable level in the second quarter.
Kim Hwa-yong, head of the National Accounts Bureau at the BOK, stated, "Operating profits in semiconductor manufacturing increased significantly, and performance improvement trends in non-semiconductor sectors such as chemical products, transport equipment manufacturing, and wholesale and retail in the service sector are gradually spreading."
He further explained, "The petroleum refining industry is improving due to better refining margins, chemical product manufacturing through increased exports of pharmaceuticals and cosmetics, machinery and equipment manufacturing through expanded facility investment in semiconductors, and ship manufacturing through increased exports of high-value-added vessels."
He analyzed, "Arithmetically speaking, if the quarter-on-quarter growth rate in the second half of this year averages around 0.2% to 0.3%, achieving the annual 3.3% growth (projected by the BOK) is possible."
Exports in the second quarter rose 1.3%, centered on semiconductors, machinery, and equipment, while imports also grew 0.7%, led by automobiles, machinery, and equipment.
Construction investment fell 0.1% due to a decrease in civil engineering, whereas facility investment increased 0.2% as gains in machinery such as semiconductor manufacturing equipment (+2.3%) and losses in transport equipment (-7.7%) offset each other.
Intellectual property products investment grew 3.4%, driven by increases in research and development and software.
Private consumption rose 0.4% as spending on goods such as home appliances and services including food, accommodation, and dining increased in tandem.
Government consumption also edged up 0.1%, centered on health insurance benefit expenditures.
Compared to the flash estimate, the growth rates for construction investment and intellectual property products investment were each revised upward by 0.1 percentage points (p), while government consumption was lowered by 0.1 percentage points (p).
Looking at the contribution to second-quarter growth by sector, net exports (exports minus imports) pushed up the growth rate by 0.3 percentage points (p).
This was because although imports increased, the expansion in exports was greater.
Domestic demand, including private consumption (+0.2 percentage points (p)) and intellectual property products investment (+0.2 percentage points (p)), stood at 0.3 percentage points (p).
Government consumption, construction investment, and facility investment all recorded a contribution of 0.0 percentage points (p).
By industry, manufacturing grew 1.4%, led by computers, electronic and optical products.
Information and communication technology (ICT) manufacturing and non-ICT manufacturing rose 1.5% and 1.4% respectively.
The service sector increased 1.0%.
Wholesale, retail, accommodation, and food services grew 0.5%, and transportation rose 2.1%.
Conversely, the construction industry shrank 1.9% overall due to a decline in civil engineering despite an increase in building construction.
Electricity, gas, and water supply businesses dropped 0.6%, led by water supply and raw material recycling, and agriculture, forestry, and fishing declined 7.2% due to sluggishness in agricultural, livestock, and related service industries as well as the fishing sector.
Nominal GDP in the second quarter increased by 9.2% from the previous quarter.
Compared to the same period last year, it surged 26.4%, marking the highest level in 47 years since the third quarter of 1979 (27.7%).
Total operating surplus rose 18.5% compared to the first quarter, recording the highest growth rate on record since statistics began publication in 2010.
Nominal gross national income (GNI) in the second quarter grew 8.8%.
This was the result of increased nominal GDP, despite nominal net primary income from abroad decreasing from 13.7 trillion won to 12 trillion won.
Real GNI also increased by 3.1%.
As terms of trade improved and real trade gains increased significantly, it surpassed the real GDP growth rate (0.6%).
The year-on-year growth rate (15.6%) was the highest level in 38 years since the fourth quarter of 1988.
The total savings rate stood at 45.6%, up 3.9 percentage points (p) from the previous quarter, reaching the highest level on record since statistics began in 1970.
This signifies that income grew more than consumption, expanding future consumption capacity.
(Photo provided by Bank of Korea, Yonhap News)
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