South Korea's economy recorded stronger-than-expected growth in Q2, driven by a semiconductor export boom, according to an iM Securities report published on the 26th. The country's GDP grew 0.6% quarter-on-quarter and 3.7% year-on-year in Q2, surpassing market expectations of 0.4% QoQ growth. Analyst Park Sang-hyun attributed the robust performance to sustained momentum from semiconductor exports amid a global AI investment cycle. The strong Q2 results follow Q1's 1.8% QoQ GDP expansion, indicating continued economic strength despite external uncertainties including geopolitical risks in Iran.
South Korea Records 0.6% QoQ GDP Growth in Q2
South Korea's Q2 GDP growth of 0.6% quarter-on-quarter and 3.7% year-on-year exceeded market consensus forecasts, according to iM Securities' report titled 'Semiconductor-driven Growth Rate Surprise Continues' published on the 26th. Park Sang-hyun, a senior analyst at iM Securities, noted that the solid Q2 performance following Q1's sharp 1.8% QoQ expansion demonstrates that strong growth momentum remains intact. The export sector's contribution to Q2 growth reached 0.7 percentage points, with goods and services exports maintaining robust performance. Park described this export contribution as encouraging given the already strong showing in Q1.
Semiconductor Exports Drive Economic Expansion
Park identified the semiconductor industry's boom cycle as the primary driver of South Korea's economic growth. He stated that semiconductor exports continue to lead the nation's growth trajectory, supported by the ongoing AI investment cycle centered in the United States. The analyst noted that while H1 semiconductor export growth was driven primarily by rising export unit prices, H2 is expected to see relatively greater increases in export volumes, further sustaining the semiconductor boom. Park emphasized that the AI investment momentum, particularly from the US market, supports the continuation of strong semiconductor export performance into H2.
iM Securities Forecasts 3.6% Full-Year GDP Growth
iM Securities projects South Korea's full-year GDP growth will reach 3.6%, with H2 maintaining solid growth trends despite potential external uncertainties. Park stated that while risks such as the Iran situation present external uncertainties, domestic growth rates are expected to maintain a robust trajectory in H2. He identified oil price volatility as a key variable, noting that if the Iran situation prolongs and leads to sustained high oil prices in H2, it could create downward pressure on growth rates. Conversely, Park observed that if the Iran situation resolves within one to two months, resulting oil price declines could provide upside pressure to H2 growth rates.
FAQ
What was South Korea's GDP growth rate in Q2?
South Korea's GDP grew 0.6% quarter-on-quarter and 3.7% year-on-year in Q2, exceeding market expectations of 0.4% QoQ growth, according to an iM Securities report published on the 26th.
Why did South Korea's economy grow strongly in Q2?
The economy's strong Q2 performance was driven by a semiconductor export boom, with the export sector contributing 0.7 percentage points to growth. Analyst Park Sang-hyun attributed this to the global AI investment cycle and sustained semiconductor demand.
What is iM Securities' forecast for South Korea's full-year GDP growth?
iM Securities projects South Korea's full-year GDP growth will reach 3.6%, with analyst Park Sang-hyun stating that H2 growth is expected to remain solid due to continued semiconductor export strength, though oil price volatility from the Iran situation presents a key risk variable.
