South Korea's economy grows in second quarter on exports surge

SEOUL

Pedestrians cross a road in front of the Bank of Korea headquarters in Seoul on July 24, 2025

South Korea's economy grew in the second quarter, the country's central bank said Thursday, as strong demand for semiconductors propelled exports to its biggest gain in nearly five years.

"GDP grew 0.5 percent compared to the same period last year," the Bank of Korea said, adding that output expanded by 0.6 percent from the previous quarter.

The quarterly gain exceeded the bank's May projection of 0.5 percent, driven by stronger private consumption and a 4.2 percent increase in exports.

But the central bank warned that U.S. tariffs posed risks to the economy, with Seoul having failed so far to reach a deal with Donald Trump's administration to bring down the threatened 25 percent levy on South Korean goods.

"Factors like U.S. tariffs are significant uncertainties that remain regarding the country's future growth trajectory," Bank of Korea official Lee Dong-won told a press briefing Thursday.

"As for the second and third quarters of this year, tariffs do not appear to have had a major impact yet. This is mainly because reciprocal tariff measures were temporarily suspended, and Korean companies responded swiftly," he added.

The country's economy has "bottomed out with a rebound in GDP in the second quarter after political instability and weak confidence drove a contraction early this year," said Hyosung Kwon an economist at Bloomberg.

"Even so, an output gap deep in negative territory means there's still slack between demand and supply," said Kwon, adding that the recovery was "fragile".