South Korea Ranks 9th in Q2 Economic Growth, Behind China but Ahead of the US

From First Place in Q1 to Ninth in Q2
Quarterly Growth Rate Is a Relative Indicator

South Korea, which recorded the highest economic growth rate among major world economies in the first quarter of this year, ranked ninth in the interim tally for the second quarter.

According to an analysis of data from the Bank of Korea’s Economic Statistics System (ECOS) released on the 2nd, South Korea saw a 0.662% increase in its economy from the previous quarter among 19 countries that have announced second-quarter growth rates, placing it in ninth position. Based on the preliminary figures released by the Bank of Korea, the Korean economy grew by 0.6% quarter-on-quarter, and by 3.7% compared to the same period last year.

Ranks 1 through 8 were occupied by the following countries: Ireland (3.921%), Lithuania (1.683%), Mexico (1.500%), Sweden (1.370%), China (0.900%), Finland (0.897%), Portugal (0.783%), and Spain (0.693%).

Following South Korea were: Hungary (0.438%), Estonia (0.416%), the Netherlands (0.405%), the United States (0.373%), the Czech Republic (0.352%), Germany (0.227%), Italy (0.192%), and France (0.164%).

The primary reason for the drop in South Korea’s growth rate after just one quarter is attributed to the base effect resulting from the unusually high growth in the first quarter. Quarter-on-quarter growth rates are measured against the previous quarter; if the economy expanded significantly in one quarter, the subsequent quarter’s growth rate will appear lower by comparison. In the first quarter of this year, exports and capital investment, especially in semiconductors, surged strongly.

However, in the second quarter, the pace of growth in key sectors slowed. Export growth dropped from 5.9% in the first quarter to 1.4% in the second quarter, while capital investment plummeted from 6.6% to 0.2%.

Nevertheless, it would be inaccurate to interpret these figures as a sign of economic stagnation in South Korea. The Bank of Korea had initially forecast second-quarter growth at around 0.2%, but the actual figure came in higher at 0.6%. In fact, considering that the economy grew an additional 0.6% after posting a 1.8% rise in the first quarter, it is viewed as more appropriate to conclude that the growth trend remains strong. Exports in the first half also soared to a record-breaking USD 496.7 billion, a sharp 48.4% increase over the same period, setting an all-time high for the first half of the year.

However, this ranking is not final. Out of the 42 countries for which the Bank of Korea tracks growth rates, only 19 have released their second-quarter figures. The United Kingdom, Australia, Japan, and 20 other countries have yet to announce their numbers. Also, for the first quarter of this year, South Korea’s growth rate based on the preliminary estimate was 1.694%, but it was later revised upward to 1.831% during the provisional tally process.

There are also concerns that if export-driven growth fails to lead to a recovery in domestic demand and construction investment, the growth momentum could weaken in the second half of the year.

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