South Korea’s GDP Grows 1% in Q3 on Semiconductor Exports and Investment

Real gross domestic product (GDP) expanded 1 per cent from the previous quarter, accelerating from growth of 0.6 per cent in the April-June period. The latest figure also exceeded the central bank’s August forecast of 0.3 per cent, according to Yonhap News Agency.

On a year-on-year basis, the economy grew 3.4 per cent in the third quarter, compared with 3.7 per cent in the preceding quarter.

Strong semiconductor demand supports growth

The performance was supported by robust exports and investment linked to the global artificial intelligence (AI) infrastructure boom, which has fuelled demand for semiconductors.

South Korea, one of the world’s major semiconductor producers, recorded outbound shipments worth a record $120.9 billion in September, an increase of 83.5 per cent from a year earlier. Semiconductor exports alone exceeded $60 billion during the month.

The export momentum has provided support to Asia’s fourth-largest economy after it grew by just 1 per cent in 2025, amid weak facility investment and a downturn in the construction sector.

The economy expanded by 1.8 per cent in the first quarter of 2026, marking its strongest quarterly growth since the third quarter of 2020, when GDP rose 2.2 per cent.

Full-year growth of 3.6% possible

According to the BOK, South Korea’s economy expanded by a cumulative 3.6 per cent over the first three quarters of 2026.

Lee Dong-won of the central bank’s statistics department said the economy could record full-year growth of 3.6 per cent if it maintains the same quarterly growth pace in the final three months of the year.

“If fourth-quarter growth reaches 1.4 percent on-quarter, the annual growth rate could reach 4 percent,” Lee said at a press conference.

The projections underline the importance of economic performance in the final quarter in determining whether South Korea can sustain its recovery and meet the stronger growth scenarios outlined by the central bank official.

Investment rises, but private consumption weakens

The detailed GDP figures showed that exports increased by 2.3 per cent from the previous quarter, while imports rose 2.4 per cent. Government spending advanced 1.9 per cent.

Net exports contributed 0.1 percentage point to quarterly GDP growth, while domestic demand added 0.9 percentage point.

Facility investment climbed 4.1 per cent, reflecting stronger spending on equipment and productive capacity. Construction investment also increased, rising 0.7 per cent during the quarter.

However, private consumption declined by 0.2 per cent, indicating that household spending remained a weak spot despite the stronger overall economic performance.

The latest figures point to an uneven recovery, with export-oriented industries and investment providing much of the momentum while consumer spending continues to face pressure. The strength of semiconductor demand and the performance of domestic consumption will remain important factors shaping South Korea’s growth outlook for the rest of 2026.