South Korea GDP Grows 0.6 Percent in Second Quarter

The Bank of Korea reported that South Korea's economy grew by 0.6 percent in the second quarter of 2026 compared to the previous quarter, exceeding the central bank's forecast of 0.2 percent. On a year-on-year basis, GDP expanded by 3.7 percent, surpassing the previously projected 3.0 percent annual growth.

The expansion was driven primarily by a semiconductor export boom, with outbound shipments in June reaching a record US$102.25 billion. Additionally, intellectual property investment jumped 3.3 percent. These gains offset a 0.2 percent decline in construction investment and headwinds resulting from Middle East tensions. Real gross domestic income surged 15.6 percent year-on-year, the highest level since 1988, attributed to higher semiconductor export prices and improved terms of trade.

In July, the central bank increased the benchmark interest rate by 25 basis points to 2.75 percent. The Bank of Korea and the Ministry of Economy and Finance indicated that an annual growth rate of 3 percent for 2026 remains attainable if the economy avoids significant contractions in the second half of the year. Sustained growth above projections for two consecutive quarters may lead to further upward revisions of annual forecasts and provide additional justification for interest rate hikes.