Q2 national income (preliminary) figures released

Preliminary real GDP growth at 0.6%, unchanged from flash estimate

Nominal GDP up 26.4%, largest gain in about 47 years

Containers stacked at Pyeongtaek Port in Gyeonggi Province. [Yonhap]
Containers stacked at Pyeongtaek Port in Gyeonggi Province. [Yonhap]

Improved terms of trade, driven largely by the semiconductor sector, pushed South Korea's gross national income to an all-time high of 666.8 trillion won ($492 billion) in the second quarter, the Bank of Korea said Tuesday. The on-year growth rate of 15.6 percent was the largest in 37 and a half years.

Real GNI rose to 666.8 trillion won in the second quarter, up 3.1 percent from the previous quarter's 647 trillion won, setting a new record high for the second consecutive quarter, according to preliminary national income statistics the Bank of Korea released Tuesday.

The quarter-on-quarter growth rate was about one-third of the previous quarter's 9.2 percent — itself the highest since records began in 1960. Compared with the same period a year earlier, however, GNI expanded 15.6 percent, the fastest pace since the fourth quarter of 1988 (15.7 percent) — a gap of 37 and a half years, or 150 quarters.

GNI measures the total income earned by a country's nationals from productive activity, including those living abroad.

The Bank of Korea said real net factor income from abroad declined, but real trading gains from improved terms of trade more than offset that, pushing GNI growth above the real GDP growth rate.

Real net factor income from abroad is calculated by adding income that nationals earn overseas and subtracting income that foreigners earn domestically. It bridges GDP and GNI, allowing a more accurate picture of residents' actual purchasing power.

Breaking down the components, real trading gains improved to 58.5 trillion won in the second quarter from 38.7 trillion won in the first quarter, reflecting better terms of trade. Real net factor income from abroad, however, fell to 7.9 trillion won from 11.6 trillion won the previous quarter.

The preliminary estimate for second-quarter real GDP growth was confirmed at 0.6 percent quarter-on-quarter, unchanged from the earlier flash estimate. On a year-on-year basis, the economy grew 3.7 percent.

The Bank of Korea said construction investment and intellectual property products investment were each revised up by 0.1 percentage point after incorporating final monthly data not available at the time of the flash estimate, while government consumption was revised down by 0.1 percentage point.

The gross savings rate rose 3.9 percentage points from the previous quarter to 45.6 percent, as growth in gross national disposable income (8.9 percent) outpaced final consumption expenditure (1.6 percent). The household net savings rate edged up 0.9 percentage point to 9.7 percent.

The domestic investment rate fell 1.1 percentage points from the previous quarter to 24.2 percent, as growth in gross national disposable income (8.9 percent) exceeded total capital formation (4.3 percent). The overseas investment rate rose 5.1 percentage points to 21.4 percent.

The GDP deflator rose 21.9 percent from the same period a year earlier. The deflator measures the overall price level by comparing nominal and real GDP, reflecting the degree of inflation in the economy.

Nominal GDP grew 9.2 percent quarter-on-quarter in the second quarter — a slowdown from the first quarter's 10.5 percent, which had been the largest quarterly gain since the first quarter of 1976. On a year-on-year basis, however, nominal GDP expanded 26.4 percent, the biggest increase since the third quarter of 1979 (27.7 percent), a gap of 46 years and nine months, or 187 quarters.


kimstar@heraldcorp.com