Second-Quarter Nominal GDP Growth Hits 47-Year High at 26.4%

South Korea’s nominal GDP grew 26.4% in the second quarter from a year earlier, marking its strongest increase in about 47 years. The last faster pace came in the third quarter of 1979, when nominal GDP rose 27.7%.

The Bank of Korea said on the 8th that real GDP increased 0.6% from the previous quarter and 3.7% from the same period last year. Both figures matched the preliminary estimates already released. Nominal GDP also grew 9.2% quarter on quarter.

Real gross national income rose 3.1% from the previous quarter and 15.6% year on year. The annual increase was the largest since the fourth quarter of 1988, when it reached 15.7%. The growth in national income outpaced real GDP growth, as it did in the first quarter, largely because trading conditions improved, particularly in semiconductors.

Nominal gross national income increased 8.8% quarter on quarter and 26.4% year on year. The Bank of Korea said the sharp quarterly rise in nominal GDP reflected an 18.5% increase in gross operating surplus, led by manufacturing, finance and insurance. Compensation of employees rose 1.9%, driven mainly by manufacturing.

Nominal net primary income from abroad fell from 13.7 trillion won to 12 trillion won, but nominal GNI still increased as nominal GDP expanded. Real net primary income from abroad also declined, from 11.6 trillion won to 7.9 trillion won. However, real trading gains rose from 38.7 trillion won to 58.5 trillion won on improved terms of trade, lifting real GNI above the 0.6% quarterly growth in real GDP. The central bank said revisions to the advance estimate raised construction investment and intellectual-property-products investment by 0.1 percentage point each, while lowering government consumption by 0.1 percentage point.

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The second-quarter real GDP growth rate is the same as the advance estimate, but incorporating some actual data from the final month of the quarter that were unavailable when the advance estimate was calculated raised construction investment and intellectual-property-products investment by 0.1 percentage point each, while lowering government consumption by 0.1 percentage point.