Faster Consumer Recovery... Q2 GDP Growth Rate Revised Up to 0.8% (Comprehensive)

Bank of Korea Announces 'Q2 National Income (Preliminary)' on 2nd
Exports Down 2.0%...Imports Up 2.8%
Both Private and Government Consumption Increase

[Asia Economy Reporters Eunbyul Kim and Sehee Jang] South Korea recorded an economic growth rate of 0.8% in the second quarter (April to June) of this year. This is a 0.1 percentage point upward revision from the preliminary figure (0.7%) announced last July.

According to the '2021 Second Quarter National Income (Provisional)' released by the Bank of Korea on the 2nd, the real Gross Domestic Product (GDP) for the second quarter of this year increased by 0.8% compared to the previous quarter. This is a 0.1 percentage point upward revision from the preliminary figure (0.7%).

The growth contribution to the real GDP in the second quarter was 0.5 percentage points from the private sector and 0.3 percentage points from the government.

By expenditure item, private consumption increased by 3.6%, mainly driven by semi-durable goods such as clothing and service consumption. Government consumption rose by 3.9%, due to increased spending on health insurance benefits.

Construction investment decreased by 2.3% as both building construction and civil engineering declined. Facility investment increased by 1.1%, led by transportation equipment.

Exports decreased by 2.0%, centered on automobiles and LCDs, while imports increased by 2.8%, driven by metal products and chemical products.

Growth rates by industry were ▲services 2.1%, ▲construction -1.3%, ▲manufacturing -1.3%, ▲agriculture, forestry and fisheries -12.7%, and ▲electricity, gas and water supply -4.1%.

The real Gross National Income (GNI) in the second quarter increased by 0.1% compared to the previous quarter. Nominal GDP, which reflects price changes, rose by 1.9% quarter-on-quarter. Nominal GNI increased by 2.4% quarter-on-quarter.

The total savings rate in the second quarter was 35.8%, and the total investment rate was 31.7%.

The GDP deflator rose by 1.6% in the second quarter. Unlike the Consumer Price Index, which measures prices closely related to consumers, the GDP deflator reflects a comprehensive price level including the Producer Price Index, import/export price indices, exchange rates, and wages. This is lower than the 2.6% recorded in the first quarter.

Due to the COVID-19 learning effect reducing consumption shocks and the reflection of the supplementary budget effect, it is expected that the annual growth rate of 4% will be achieved this year.

Earlier, Park Yang-su, Director of the Economic Statistics Bureau at the Bank of Korea, predicted in July that "if growth of 0.7% is achieved in both the third and fourth quarters, the Bank of Korea's annual forecast of 4.0% can be met."

In this regard, Professor Donghyun Ahn of Seoul National University's Department of Economics stated, "Since major countries such as the United States and Europe are not reintroducing social distancing, exports are expected to continue the current trend," adding, "With the government's supplementary budget effect also reflected in the growth rate, achieving an annual growth of 4% seems possible."

This content was produced with the assistance of AI translation services.