Korea's real gross domestic product (GDP) rose 1.8% in the first quarter and increased 0.6% in the second quarter, the Bank of Korea (BOK) said on the 23rd. Despite base effects from the strong first-quarter figure, the second-quarter growth held up and exceeded the BOK's projection of 0.2%.
In response, the Ministry of Finance and Economy said in a press reference that "with solid second-quarter GDP, the likelihood of achieving 3% annual economic growth has increased." If realized, it would be the highest growth rate since 2021 (4.7%). The government also said, "The chances of achieving $40,000 in gross national income (GNI) per capita for the first time have increased."
According to the Bank of Korea (BOK) that day, real GDP in the first half grew 3.8% from a year earlier. It was the highest in 4 years and 6 months since the second half of 2021 (4.5%). The ministry said, "Despite the impact of the Middle East war, exports were strong on the back of a semiconductor boom and an increase in foreign tourists."
The government expected that a sharp increase in real gross domestic income (GDI) will lead a domestic demand recovery. Real GDI in the second quarter grew 15.6% from a year earlier. It was the highest in 38 years and 3 months since the first quarter of 1988 (16.4%), a period of rapid growth. The government said, "An increase in GDI translates into greater investment capacity for corporations and stronger purchasing power for the household."
However, the government said that if tensions in the Middle East war flare up again and the United States imposes large-scale tariffs, it could weigh on Korea's growth momentum. It also said that per capita GNI may fall short of $40,000 if the won-dollar exchange rate rises sharply or if nominal growth in the second half is not as strong as expected.