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

SEOUL: South Korea's economy grew faster than expected in the third quarter on booming chip exports, advance central bank estimates showed on Tuesday (Oct 27).

Gross domestic product expanded 1 per cent in the July-September quarter from the preceding three months, when it grew 0.6 per cent. It was stronger than a median 0.7 per cent increase tipped in a Reuters poll of economists.

Amid the global boom in AI investment, South Korea's exports topped US$800 billion in January to September, higher than last year's full-year record, and are on track to exceed US$1 trillion this year, which will make South Korea the fourth country to reach the milestone, after the US, China and Germany.

The Bank of Korea kept interest rates unchanged last week, after back-to-back hikes in July and September, but maintained a hawkish stance by upgrading its economic growth forecasts and remaining upbeat about the country's export momentum.

In the third quarter, exports rose 2.3 per cent on demand for semiconductors, machinery and electric equipment, while imports grew 2.4 per cent.

Facilities investment jumped 4.1 per cent, led by machinery such as semiconductor manufacturing equipment. Private consumption fell 0.2 per cent, the first decline in nearly four years.

On a year-on-year basis, GDP grew 3.4 per cent, after rising 3.7 per cent in the quarter before, according to the Bank of Korea, also stronger than economists' expectations for a 3 per cent increase.