Korea's real gross domestic product (GDP) grew 0.6% in the second quarter from the previous quarter (preliminary), the Bank of Korea released on the 8th. That is the same as the advance estimate the Bank of Korea released in July and exceeds the projection of 0.2%. Amid rising global oil prices due to the Middle East war that began at the end of February, semiconductor exports drove the Korean economy. As a result, nominal GDP jumped 26.4% from a year earlier, hitting a record high for the first time in 47 years since the third quarter of 1979 (27.7%).
◇ Exports and imports revised down 0.1 percentage point from the advance estimate
According to the Bank of Korea, exports rose 1.3%, led by semiconductors, machinery and equipment. Imports increased 0.7% as machinery and equipment rose. However, both were revised down 0.1 percentage point from the prior advance estimate. Compared with a year earlier, exports rose 8.9% and imports increased 6.2%.
Private consumption increased 0.4% as spending on goods such as home appliances and services such as food and lodging both rose. Facility investment increased 0.2% on the back of machinery such as semiconductor manufacturing equipment. Government consumption increased 0.1% due to health insurance benefit expenditure. However, compared with the advance estimate, it was 0.1 percentage point lower.
In particular, investment in intellectual property products increased 3.4%, centered on research and development and software, and was revised up 0.1 percentage point from the advance estimate. Construction investment fell 0.1% as civil engineering decreased, but it was 0.1 percentage point higher than the advance estimate. The Bank of Korea said, "This reflects some actual data for the final month of the quarter that were not available at the time of the advance estimate."
Nominal GDP grew 9.2% from the previous quarter. Compensation of employees increased 1.9%, led by manufacturing, and gross operating surplus rose 18.5%, led by manufacturing and financial and insurance services. The growth rate of gross operating surplus was the highest since the Bank of Korea began publishing the statistics in the second quarter of 2010.
◇ Real national income up 3.1%… "thanks to higher semiconductor prices"
Real gross national income (GNI) in the second quarter increased 3.1% from the previous quarter. That significantly outpaced the second-quarter real GDP growth rate. The Bank of Korea explained, "With improved terms of trade, real trade gains increased from 3.87 trillion won to 5.85 trillion won, outpacing the real GDP growth rate." It means that improved terms of trade, including higher prices for key export items such as semiconductors, boosted the public's real purchasing power.
GDP shows how much is produced in a country, while GNI shows the real purchasing power of income earned by a country's people. When real GNI's growth rate exceeds GDP's, it means the increase in people's perceived income is larger than the value added produced domestically.
The gross saving rate was 45.6%, up 3.9 percentage points from the previous quarter, marking a record high since the related statistics began in the first quarter of 1970. Over the same period, the household net saving rate was found to be 9.7%, up 0.9 percentage point. The domestic investment rate was 24.2%, down 1.1 percentage points.