South Korean economy gains momentum as exports drive 2026 growth outlook

The second-quarter growth rate slowed from the 1.8 percent expansion recorded in the first quarter, which marked the strongest quarterly growth since the third quarter of 2020. However, the latest figure exceeded the BOK’s previous forecast of 0.2 percent growth.

On an annual basis, South Korea’s real GDP increased 3.7 percent in the April-June period, slightly lower than the 3.8 percent growth recorded in the first quarter. For the first half of 2026, Asia’s fourth-largest economy expanded 3.8 percent year over year.

The BOK said the economy maintained solid momentum despite concerns over geopolitical tensions and the impact of a high base effect following strong first-quarter growth. The central bank estimated that South Korea could achieve 3 percent annual GDP growth in 2026 if the economy avoids a significant contraction in the second half of the year.

Exports remained the main driver of growth, rising 1.4 percent from the previous quarter, while imports increased 0.8 percent. Net exports contributed 0.3 percentage points to quarterly GDP growth. Private consumption also improved, increasing 0.5 percent and adding 0.2 percentage points to growth.

Government spending rose 0.2 percent, while facility investment increased 0.2 percent. However, construction investment declined 0.2 percent.

South Korea’s outbound shipments reached a record 102.25 billion US dollars in June, up 70.9 percent from a year earlier and exceeding the 100 billion US dollars mark for the first time. Semiconductor exports nearly tripled to a record 44.82 billion US dollars.

The improvement in trade conditions also lifted real gross domestic income (GDI), which jumped 15.6 percent year over year in the second quarter, the strongest increase since the first quarter of 1988, when it rose 16.4 percent.

The BOK said higher semiconductor exports helped offset the impact of rising energy prices linked to ongoing Middle East tensions.

The central bank previously forecast 2.6 percent economic growth for 2026, but officials said stronger-than-expected chip exports could lead to an upward revision.

The Ministry of Economy and Finance said the latest GDP figures have increased the likelihood of South Korea meeting its 3 percent growth target, while also improving prospects of reaching 40,000 US dollars in per capita gross national income this year.

However, officials warned that risks remain, including renewed geopolitical tensions, possible disruptions to global shipping routes, and uncertainty surrounding U.S. tariff policies.

Earlier, Qazinform reported South Korea's first-half ICT exports reach a record high on AI-driven demand.