South Korea nominal GDP jumps at fastest pace in 47 years in Q2

South Korea's nominal GDP surged at its quickest rate in 47 years during the second quarter, bolstered by robust semiconductor exports and investments in artificial intelligence, according to data released by the Bank of Korea on Tuesday. The economy expanded 9.2% quarter-over-quarter and 26.4% year-over-year, marking the fastest annual growth since the third quarter of 1979, when it surged 27.7%.

Real GDP, which excludes price fluctuations and serves as the primary gauge of economic growth, expanded 0.6% from the previous quarter, aligning with both the Bank of Korea's initial estimate and economists' predictions. Annual growth mirrored expectations at 3.7%, the same as the first quarter. Exports saw a modest 1.3% increase quarter-over-quarter, down significantly from the 5.9% rise in the first quarter, yet the surge in global demand for semiconductors, machinery, and equipment continued to bolster shipments, underscoring the significance of the semiconductor cycle to South Korea's economic resurgence.

The economy's vigor was also evident in national income. Per-capita gross national income surged 8.8% quarter-over-quarter and 26.4% year-over-year in nominal terms, while real GNI rose 3.1% quarter-over-quarter and 15.6% year-over-year. Real GNI's annual increase marked the most substantial since the fourth quarter of 1988, when it rose 15.7%.

The Bank of Korea's optimism has prompted it to raise its 2026 growth forecast to 3.3%, citing strong exports fueled by the ongoing semiconductor supercycle. The central bank hiked its Base Rate by 25 basis points to 3.00% on August 27, citing outpacing growth, robust exports, and recovering domestic demand. It anticipates growth of 3.3% this year and 2.9% in 2027, while projecting consumer inflation at 2.7% in 2026.

The South Korean won appreciated by around 0.3% against the U.S. dollar, with USD/KRW at approximately 1,340.35, while the KOSPI rose 1.16% to 7,076.76.