South Korea growth beats forecasts as chip boom drives third-quarter expansion
SEOUL, Oct 27 — South Korea’s economy grew more than three times faster than expected in the third quarter,...
South Korea's economy expanded at a remarkable rate in the third quarter, outpacing forecasts and driven primarily by surging demand for semiconductor chips. The Bank of Korea (BOK) reported that GDP grew by 1.0 percent quarter-on-quarter in July-September, surpassing the initial forecast of 0.3 percent growth. This surge was largely fueled by a 2.3 percent rise in exports, predominantly in semiconductors, machinery, and electrical equipment.
Additionally, investment in manufacturing facilities increased by 4.1 percent, largely due to machinery used in chip production. Over the past year, the economy grew by 3.4 percent, slightly below the 3.7 percent expansion seen in the previous quarter. Real gross domestic income surged 18.8 percent year-on-year, marking the fastest increase in nearly five decades, driven by higher semiconductor prices.
The country's economy also recorded its fastest growth in more than five years during the first quarter, expanding by 1.7 percent month-on-month due to heightened chip demand. Bloomberg Economics' Kwon Hyo-sung noted that the BOK's assessment of strong exports and investment remaining robust was validated by the data. However, analysts cautioned that growth remains heavily reliant on the semiconductor sector, warning that South Korea could be exposed to a slowdown in global AI spending.
The semiconductor boom has also resulted in South Korea's current account surplus reaching record levels, with a US$116.6 billion surplus in the second quarter, surpassing the combined surpluses of major manufacturing economies like Germany and Japan for the first time since 1996. The International Monetary Fund projects South Korea's annual current account surplus to reach US$421.9 billion this year, the second-largest among 190 economies, trailing only China.
Semiconductor exports surged 218.7 percent year-on-year to US$148 billion in the third quarter, according to government data. The South Korean stock market, Seoul's Kospi index, opened more than four percent higher on Tuesday, buoyed by a Wall Street rally and renewed optimism over the AI boom.
Written by urgent.news from Malay Mail's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
