South Korea’s Per Capita Income Expected to Top $40,000 After Semiconductor Boom

South Korea’s nominal gross domestic product grew 26.4% in the second quarter from a year earlier, its fastest increase in about 47 years, as semiconductor exports benefited from strong global artificial intelligence investment.

The Bank of Korea said on the 8th that real GDP rose 0.6% from the previous quarter and 3.7% from a year earlier, matching its preliminary estimate. Nominal GDP increased 9.2% from the previous quarter. The year-on-year nominal growth rate was the highest since the third quarter of 1979, when it reached 27.7%.

Kim Hwa-yong, head of the national income division at the central bank, said strong growth continued in the second quarter despite the effects of war in the Middle East. He attributed the performance to increased global AI investment and higher semiconductor-related exports. He said improving profitability among semiconductor companies was expected to spread through higher operating profits, government income from tax revenue and household income.

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Despite the effects of the war in the Middle East, strong growth continued in the second quarter as global AI investment increased and semiconductor-related exports rose.

Manufacturing rose 1.4% from the previous quarter and 6.7% from a year earlier, led by computers, electronics and optical equipment. Services increased 1.0% quarter on quarter, while construction fell 1.9% as civil engineering work declined. Private consumption rose 0.4%, equipment investment increased 0.2%, and research and development and software investment rose 3.4%. Exports grew 1.3%, led by semiconductors, machinery and equipment.

Real gross national income rose 3.1% from the previous quarter and 15.6% from a year earlier, its strongest year-on-year increase since the fourth quarter of 1988. The Bank of Korea linked the increase to improved terms of trade, with export prices rising more than import prices, particularly in semiconductors. The gross saving rate reached a record 45.6% after rising 3.9 percentage points from the previous quarter.

The central bank said an annual growth rate of 3.3% remains achievable if the economy expands by about 0.2% to 0.3% in the second half. Kim said per capita national income is highly likely to exceed $40,000 this year unless the economy suffers an unexpected shock.

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Unless there is an unexpected shock, the possibility that per capita national income will exceed $40,000 this year has become very high.