The South Korean June quarter GDP grew compared to the March quarter, official figures showed on Monday. The growth was underpinned by strong exports and consumer spending. Although the growth slackened from the previous quarter, it came in ahead of the pace economists had been expecting.
Data from the Bank of Korea showed the economy grew 1.5% between April and June compared to the preceding three months. This was slower than the 2.1% growth during the March quarter. Economists were looking for a 1.3% increase.
Exports of goods and services, which account for nearly 50% of the country's GDP, jumped 7% during the quarter, accelerating from the 2.9% expansion in the previous quarter. The increase was led by exports of automobiles, semiconductors and machinery. Imports advanced 7.1%.
Private consumption climbed 0.8%, faster than the 0.7% rise in the previous quarter. This was fueled by an increase in expenditure on non-durables, semi-durables and services. Government spending edged up 0.1%.
Facilities investment jumped 8.1%, led by a surge in machinery investment. On the other hand, construction investment shrank 3.4% mainly due to a decrease in investment in residential construction and civil engineering.
On the production side, the manufacturing sector grew 5.1%, mainly due to growth in the machinery equipment, fabricated metal products & automobile manufacturing sub-sector. The services sector edged up 0.2% mainly due to the wholesale & retail trade, restaurant & hotel, and the transport & storage sub-sectors.
On the other hand, the construction sector shrank 0.8%, led by a decrease in residential building activity. The agriculture, forestry & fishing and electricity, gas & water sectors recorded no growth.
On a year-over-year basis, GDP grew 7.2% in the June quarter. It follows a 8.1% expansion in the March quarter of last year. Economists had forecast a 6.9% expansion.
The annual growth was driven by a faster increase in manufacturing which offset the fall in construction. On the expenditure side, facilities investment and exports rose steeply.
Meanwhile, the country's gross domestic income grew 0.5% compared with the previous quarter. Year-on-year, gross domestic income was up 6%.
The strong growth confirms Asia's fourth-largest economy is on the recovery track and may force the central bank to continue raising interest rates. Earlier this month, the Bank of Korea raised its key interest rate by a quarter percentage point to 2.25%, the first increase since the global financial downturn. The decision took analysts by surprise who had expected the bank to keep rates unchanged at their record low for a 17th straight month.
South Korea has recovered strongly from the global financial crisis, boosted by record low interest rates and government stimulus measures. The country saw a record trade surplus of $7.47 billion last month, with exports surging 32.4% annually. The government raised its 2010 growth projection for the economy last month to 5.8% from 5%.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.