South Korean Q2 revised GDP better than expected, outlook still remains cloudy

South Korea’s revised gross domestic product rose during the second quarter, but third quarter growth outlook faces downside risks including from delays in ratifying a much-anticipated supplementary budget.

South Korea's gross domestic product was upwardly revised to 3.3 percent on year in the second quarter of 2016, data released by the Bank of Korea showed Friday. This is up from the July 25 preliminary reading for 3.2 percent, and it was up from 2.8 percent in the first quarter.

On the production side, the manufacturing sector expanded 2.2 percent on year, centering on production of petroleum and chemical products. Construction jumped 12.4 percent on year, mainly due to the growth in residential building construction. Services showed a 3.0 percent annual growth.

Further, Nominal gross national income increased 0.8 percent relative to the previous quarter, while real gross national income fell 0.4 percent. The GDP deflator climbed 1.5 percent on year, while the gross domestic investment ratio was 28.7 percent, 1.3 percentage point higher than in the previous quarter.

On a seasonally adjusted annualized basis, GDP jumped up to 0.8 percent from the initial reading of 0.7 percent in July. GDP expanded 0.5 percent on quarter in Q1. Moreover, a finance ministry official expects the economy to post about 2.8 percent growth this year, in line with the government forecast.

Meanwhile, a government-led restructuring of debt-ridden shipbuilding and shipping industries is an ongoing concern for an economy driven by manufacturing and exports.