Seoul: The South Korean economy recorded a 0.6 percent growth in the second quarter compared to the previous quarter, driven by strong export performance, as central bank data revealed. This expansion sets the stage for an annual growth rate of 3 percent, as indicated by figures from the Bank of Korea (BOK).

According to Yonhap News Agency, the real gross domestic product (GDP) of South Korea-an essential measure of economic health-climbed 0.6 percent during the April-June period compared to the preceding three months. This growth, although slower than the previous quarter's 1.8 percent expansion, surpasses the BOK's earlier prediction of 0.2 percent growth.

Compared to the same period last year, the South Korean economy expanded by 3.7 percent in the second quarter, a slight deceleration from the 3.8 percent growth observed in the first quarter. For the first half of the year, the economy grew by 3.8 percent compared to the previous year, as per BOK data.

Despite potential challenges arising from Middle East tensions and the significant growth in the first quarter, South Korea maintained steady growth, highlighted Lee Dong-won from the BOK's statistics department. He noted that achieving a 0.6 percent increase on a quarterly basis signifies a robust expansion.

The economy is projected to grow by 3 percent in 2026, provided there are no more than 0.1 percent quarter-on-quarter declines in the upcoming quarters. This anticipated growth would mark the first 3 percent annual increase since 2021, when the economy grew by 4.5 percent.

Examining previous trends, South Korea's economy contracted by 0.2 percent in the first quarter of 2025, followed by growth of 0.7 percent and 1.3 percent in the subsequent quarters. However, it experienced a decline of 0.2 percent in the fourth quarter due to weak facility investments and a slump in the construction sector.

In the detailed breakdown, exports grew by 1.4 percent and imports by 0.8 percent from the previous quarter, while private consumption increased by 0.5 percent. Net exports and private consumption contributed 0.3 and 0.2 percentage points, respectively, to the quarterly GDP growth. Government spending and facility investment both edged up by 0.2 percent, while construction investment decreased by 0.2 percent.

Real gross domestic income (GDI) surged 15.6 percent year-on-year in the second quarter, the highest since the first quarter of 1988. The BOK attributed this to rising energy prices offset by strong semiconductor exports, propelling GDI to grow at a faster rate.

In May, the BOK forecasted a 2.6 percent economic growth for 2026. However, the central bank recently announced plans to revise the growth forecast upwards, driven by unexpectedly strong semiconductor exports.

South Korea's exports hit a record $102.25 billion in June, marking a 70.9 percent increase from the previous year and surpassing the $100 billion milestone for the first time. Semiconductor exports nearly tripled, reaching a record $44.82 billion.