(2nd LD) S. Korea's GDP expands 1 pct in Q3 on strong exports, investment: BOK

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By Kim Boram

SEOUL, Oct. 27 (Yonhap) -- Strong semiconductor-led exports and investment drove South Korea's economy to grow faster than expected by 1 percent in the third quarter from a quarter earlier, putting annual growth of 3.6 percent within reach, central bank data showed Tuesday.

The country's real gross domestic product (GDP) -- a key measure of economic growth -- rose 1 percent in the July-September period from three months earlier, according to advance data from the Bank of Korea (BOK).

The third-quarter reading marked an increase from the previous quarter's 0.6 percent expansion and exceeded the BOK's earlier forecast of 0.3 percent made in August.

From a year earlier, the South Korean economy expanded 3.4 percent in the third quarter, slowing slightly from 3.7 percent in the second quarter.

Asia's fourth-largest economy grew 1 percent in 2025 amid weak facility investment and a downturn in the construction sector.

Fueled by the artificial intelligence (AI) infrastructure boom and resulting global demand for semiconductors, the South Korean economy grew 1.8 percent in the first quarter of 2026, marking its strongest quarterly growth since the third quarter of 2020, when the economy expanded 2.2 percent.

The BOK said the economy had grown a cumulative 3.6 percent over the first three quarters of 2026.

"If the economy maintains the on-quarter growth pace in the fourth quarter, GDP will likely grow 3.6 percent for the full year," Lee Dong-won of the BOK's statistics department said during a press conference. "If fourth-quarter growth reaches 1.4 percent on-quarter, the annual growth rate could reach 4 percent."

South Korea's outbound shipments topped a record US$120.9 billion in September, up 83.5 percent from a year earlier, with exports of semiconductors exceeding $60 billion.

In detail, exports rose 2.3 percent from the previous quarter and imports increased 2.4 percent, while government spending advanced 1.9 percent.

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

Facility investment increased 4.1 percent, and construction investment climbed 0.7 percent on a quarterly basis.

However, private consumption fell 0.2 percent.

Real gross domestic income (GDI), which reflects changes in terms of trade, rose 18.8 percent on-year in the third quarter, marking the highest spike since the fourth quarter of 1977, when it reached 19 percent.

The BOK attributed the decline in private consumption to reduced spending on financial services amid a stock market correction and sluggish automobile sales caused by general strikes at major automakers.

"Without these two negative factors, private consumption could have risen 0.4 percent in the third quarter," the BOK official said. "Private consumption is expected to rebound in the fourth quarter or the first quarter of next year as major semiconductor companies pay dividends to shareholders and performance-based bonuses to employees."

With the faster-than-expected third-quarter growth, the BOK may likely raise its growth forecast of 3.3 percent made in August.

The central bank will release its new growth predictions next month.

brk@yna.co.kr
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