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South Korean Economy Shows Signs of Recovery in Second Quarter

Strategic Insights

— 1 min read

South Korea's economy rebounded in the second quarter, registering a 0.6 percent growth in real gross domestic product (GDP) thanks to a recovery in private consumption and robust exports. The growth exceeded market expectations and followed an unexpected 0.2 percent contraction in the first quarter, driven by a domestic political crisis and uncertainties stemming from US President Donald Trump's tariff measures. The Bank of Korea attributed the improvement to a surge in semiconductor shipments and a rebound in private consumption following the easing of domestic political uncertainty.

Key Takeaways:

  • The South Korean economy grew 0.6 percent in the second quarter, exceeding market expectations of a 0.5 percent gain.
  • Private consumption rebounded 0.5 percent, with expenditures on automobiles and culture increasing, among other things.
  • Exports increased 4.2 percent, led by strong global demand for semiconductors and petrochemical products.
  • Government spending gained 1.2 percent, while facility investment dipped 1.5 percent, and construction investment also shed 1.5 percent.
  • The Bank of Korea attributed the improvement to a surge in semiconductor shipments and a rebound in private consumption following the easing of domestic political uncertainty.
  • The BOK official noted that the impact of US tariffs is likely to be more pronounced in the third quarter, but domestic demand could improve led by the supplementary budget and a recovery in economic sentiment.

Statistics:

  • GDP growth: 0.6 percent in the second quarter, compared to 0.2 percent contraction in the first quarter (BOK).
  • Private consumption growth: 0.5 percent in the second quarter (BOK).
  • Exports growth: 4.2 percent in the second quarter, led by strong demand for semiconductors and petrochemical products (BOK).
  • Government spending growth: 1.2 percent in the second quarter (BOK).
  • Facility investment change: -1.5 percent in the second quarter (BOK).
  • Construction investment change: -1.5 percent in the second quarter (BOK).
  • Net exports contribution: 0.3 percentage point to economic growth in the second quarter (BOK).
  • Domestic demand contribution: 0.3 percentage point to economic growth in the second quarter (BOK).

Sources:

  • Yonhap News Agency (24 Jul 2025)
  • Bank of Korea official Lee Dong-won (cited by Yonhap News Agency)

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