South Korea’s GDP Climbs 0.6 Percent in Second Quarter

(MENAFN) South Korea’s inflation-adjusted gross domestic product (GDP) climbed 0.6% in the second quarter compared to the previous three months, driven by a revival in consumer spending and exports, Bank of Korea (BOK) data revealed Thursday.

Following a 0.2% contraction in the January-March period, the seasonally adjusted GDP returned to growth between April and June, signaling a partial economic recovery.

The upswing was largely fueled by stronger private consumption and a rebound in overseas shipments.

Exports—which make up nearly 50% of the trade-dependent economy—surged 4.2% from the prior quarter, bouncing back from a 0.6% decline. This rebound was supported by robust global demand for semiconductors and petroleum-based goods.

Imports also showed a strong recovery, expanding 3.8% after contracting 1.1% in the previous quarter.

Private consumption, a key pillar of South Korea’s economy, rose by 0.5% in Q2, reversing a 0.1% dip recorded in the first quarter.

While government spending increased by 1.2% during the April-June period, investment in facilities fell by 1.5% due to weakening demand for equipment and vehicles.

Construction investment shrank by 1.5%, extending its slump for the fifth consecutive quarter amid continued weakness in the real estate market.

In May, the BOK slashed its full-year GDP growth forecast to 0.8%, down sharply from its earlier 1.5% projection issued three months prior. The revision reflected mounting concerns over U.S. tariffs and persistently weak domestic demand.

To address slowing growth, the central bank has trimmed its key interest rate by 25 basis points twice this year—in February and May—following similar cuts in October and November of last year, bringing the rate to 2.50%.

In response to sluggish consumer activity, the newly inaugurated Lee Jae-myung administration, which took office on June 4, has begun rolling out a supplementary budget this month aimed at stimulating local demand.

By sector, manufacturing output increased 2.7% in the second quarter, rebounding from a 0.6% decline in the first quarter. The service sector saw a 0.6% uptick, bolstered by growth in transportation and real estate.

Construction output fell 4.4%, marking five straight quarters of decline. Production in agriculture, forestry and fisheries dropped 1.4%, while the electricity, gas and water supply sector fell by 3.2%.

Real gross domestic income (GDI) rose 1.3% in Q2, recovering from a 0.6% decline in the previous quarter.

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