Korea's GDP up 0.6% in Q2 despite export decline

Korea’s gross domestic product (GDP) grew 0.6 percent in the April-June period from the previous quarter, remaining unchanged from the earlier estimate.

Shipping containers are stacked up at a port in Busan on Aug. 1 [JOONGANG PHOTO]

Korea’s gross domestic product (GDP) grew 0.6 percent in the April-June period from the previous quarter, remaining unchanged from the earlier estimate.

Second-quarter expansion was faster than the 0.3 percent growth in the first quarter despite a dip in exports, showed preliminary data by the Bank of Korea (BOK) on Tuesday.

It was the second consecutive quarter of growth after Korea’s GDP fell 0.3 percent in the fourth quarter of last year.

On a yearly basis, Korea’s economy grew 0.9 percent in the second quarter, the same pace of growth as the first quarter.

Korea’s exports fell 0.9 percent in the April-June period from the previous quarter, due to a fall in petroleum products. It was a sharp turnaround from the 4.5 percent gain in the previous quarter.

Imports slid 3.7 percent in the same period, centered on crude oil and natural gas, compared to a 4.2 percent gain in the January-March period.

Government spending also slid 2.1 percent in the second quarter while facility investment rose 0.5 percent.

“Spending will gradually recover while sluggishness in exports will also ease as the economy improves,” according to a BOK official at a press conference held at the bank's office in central Seoul on Tuesday.

The official added weak pent-up spending, sluggish recovery of China’s economy and potential risks of a continued monetary tightening in the United States as some of the uncertainties that may affect Korea’s economic recovery.

Exports have been on a steady decline since October last year following aggressive monetary tightening in major economies. Exports shrank for the 11th consecutive month in August amid sluggish global demand, although the pace of decline moderated.

Last year, the Korean economy grew 2.6 percent, down from the 4.3 percent expansion in the previous year. It was the slowest pace of growth since the economy contracted 0.7 percent in 2020 due to the Covid-19 pandemic.

Korea’s gross national income (GNI) decreased by 0.7 percent in the April-June period from a quarter earlier despite an expansion of the GDP, said the BOK. It cited “worsened” terms of trade caused by a more drastic fall in the price of chips, Korea’s key export material, compared to crude oil.

The gross savings ratio, which divides gross savings by gross national disposable income, stood at 33.5 percent in the second quarter, up 0.1 percentage points from the previous quarter.

The gross domestic investment ratio, which divides gross capital formation by gross national disposable income, was 32.2 percent, also 0.1 percentage points higher than the previous quarter.

BY JIN MIN-JI [jin.minji@joongang.co.kr]