Advance estimates for South Korean GDP show the economy weakened in the three months to June. GDP contracted by 0.2 percent on the quarter, down sharply from growth of 1.3 percent in the three months to March, with year-over-year growth slowing from 3.3 percent to 2.3 percent. PMI surveys, in contrast, showed contraction in South Korea's manufacturing sector in April but a strong rebound in May and June, with monthly industrial production data showing modest growth.

Weaker headline GDP growth in the three months to June was driven by domestic demand. Private consumption fell 0.2 percent on the quarter, weakening from growth of 0.7 percent previously, while investment slowed sharply, down 1.3 percent after a previous increase of 1.1 percent. Government consumption also rose at a slightly slower pace. Net exports also contributed to weaker headline growth, with export growth slowing and imports rebounding on the quarter after a previous decline.

At their most recent policy meeting earlier this month, officials at the Bank of Korea left policy rates on hold at 3.50 percent, as they have since the start of 2023. This decision reflected officials' assessment that core inflation will"continue its slowing trend". Officials also expressed confidence about the growth outlook and retained their forecast for GDP to expand by 2.5 percent this year.

Second-quarter GDP is expected to edge 0.1 percent higher on the quarter and rise 2.7 percent on the year. These would compare respectively with growth of 1.3 and 3.3 percent in the first quarter and 0.6 and 2.2 percent in the fourth quarter.

GDP data are a comprehensive measure of South Korea’s overall production and consumption of goods and services. GDP serves as one of the primary measures of overall economic well-being. GDP calculates the total market value of goods and services produced in South Korea within a given period after deducting the cost of goods and services used up in the process of production. Therefore, GDP excludes intermediate goods and services and considers final aggregates only.

Gross domestic product (GDP) can be measured using three approaches, namely the production, income and expenditure approaches. The production measure of GDP is derived from firm level data and estimates the value added by all producing industries in the South Korea economy. The income measure of GDP is derived from earnings data and estimates how the income earned from these producing industries is then distributed throughout the economy as returns to labor, capital and government. The expenditure measure of GDP is derived from data estimating spending on goods and services by final end users and includes consumption, investment and exports minus the value of imports.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios. The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.