South Korea’s economy grows faster than expected in third quarter

South Korea's economy surged faster than anticipated in the third quarter, driven by a surge in chip exports, according to advance estimates from the central bank. The country's Gross Domestic Product (GDP) expanded by 1.0% from July to September, a significant increase from the 0.6% growth in the previous quarter. This performance surpassed the average forecast of 0.7% growth shared by economists in a Reuters poll.

The global surge in investment in Artificial Intelligence (AI) played a substantial role in this economic uptick. South Korean exports reached an unprecedented $800 billion from January to September, surpassing the previous annual record set in the full year. With projections indicating potential surpassing of the $1 trillion mark this year, South Korea would join the US, China, and Germany as one of four nations to achieve this milestone.

The Bank of Korea maintained its interest rates steady after two consecutive hikes in July and September. Despite these hikes, the central bank retained a bullish outlook, raising its economic growth forecasts and expressing optimism about the nation's export momentum. In the third quarter, exports increased by 2.3% due to high demand for semiconductors, machinery, and electric equipment. Meanwhile, imports rose by 2.4%.

Facilities investment also saw a significant boost, growing by 4.1%, largely fueled by machinery such as semiconductor manufacturing equipment. However, private consumption declined by 0.2%, marking the first decrease in nearly four years. GDP growth on a year-on-year basis was recorded at 3.4%, slightly higher than the 3.0% growth expected by economists, as reported by the Bank of Korea.