Real gross domestic income (GDI) in the second quarter rose 15.6% from a year earlier. The growth rate was the highest since the first quarter of 1988 (16.4%), when exports boomed under the three lows (low interest rates, low oil prices, and a low dollar). A global surge in semiconductor demand boosted domestic corporations' export volumes and prices. The gap between the real GDI and real gross domestic product (GDP) growth rates was 11.9 percentage points, the largest since the Bank of Korea began compiling statistics in the 1960s.
GDP indicates how much our economy produced in the second quarter through exports and other activity, while GDI shows how much it earned through that. Whether the actual money going into people's pockets increased or decreased can be checked with GDI. Earlier, Bank of Korea Governor Shin Hyun-song said at a press conference on the 16th, after raising the rate to 3.75% from 3.5% annually, that the possibility of an additional rate hike would depend on whether "GDP and GDI growth continues."
According to the "advance estimate of real gross domestic product for the second quarter" released by the Bank of Korea (BOK) that day, real GDP in the second quarter increased 3.7% from a year earlier, and real GDI rose 15.6%. While the real GDP growth rate edged down from the first quarter (3.8%), the real GDI growth rate expanded from the first quarter (13.2%). The real GDI growth rate was the highest since the first quarter of 1988 (16.4%). The gap between the real GDP and GDI growth rates was the largest on record.
Along with GDP, the GDI growth rate is drawing attention because it can feed into inflationary pressure and provide grounds for the Bank of Korea (BOK) to raise rates further. Recently, the consumer price inflation rate exceeded 3% in May–June due to the fallout from the Middle East war. That far exceeded the BOK's medium-term price stability target of 2%. Accordingly, Governor Shin Hyun-song said at a press conference on the 16th, "If income improvement keeps materializing very strongly, we should be mindful of inflationary pressure coming from the demand side."
Earlier, the Bank of Korea (BOK) noted in an analytical report that "the recent widening of the GDP–GDI gap stems from improved terms of trade driven by a semiconductor upcycle, which is different from the past when a drop in import prices was the main cause." It added, "This time, the increase in GDI will bolster household purchasing power and expand corporations' capacity for investment, supporting a recovery in domestic demand."