South Korea's economy grows 1% in Q3 driven by chip exports and investment
Real GDP in South Korea grew 1% in the third quarter of 2026 compared with the previous quarter, beating expectations thanks to semiconductor exports and equipment investment, while private consumption fell 0.2%, bringing annual growth close to 3.6%.
South Korea's economy grew by 1 percent in the third quarter of the year compared with the previous quarter, according to preliminary estimates announced by the Bank of Korea on Tuesday, October 27, 2026, in a faster-than-expected pace driven by a surge in semiconductor exports and investment, putting roughly 3.6 percent annual growth within reach.
The reading was higher than second-quarter growth of 0.6 percent and well above the central bank's August forecast, which had estimated growth of just 0.3 percent for the July-September period. On a year-on-year basis, real GDP rose 3.4 percent, after quarterly growth of 1.8 percent in the first quarter of the year.
Chips drive exports and investment
Exports rose 2.3 percent quarter-on-quarter led by semiconductors, machinery and electrical equipment, while imports increased 2.4 percent. Investment in facilities and equipment jumped 4.1 percent, supported by chip-manufacturing equipment; construction investment rose 0.7 percent, and government spending increased 1.9 percent. Domestic demand contributed 0.9 percentage point to quarterly growth, and net exports contributed 0.1 point.
A Bank of Korea official in the Economic Statistics Department, Lee Dong-won, said about half of third-quarter economic growth was attributable to the semiconductor sector amid rising global demand for chips related to artificial intelligence. Real gross national income also rose 18.8 percent year-on-year, the largest increase since the final quarter of 1977.
Temporary fall in private consumption
By contrast, private consumption declined 0.2 percent. The central bank attributed this to lower spending on financial services following a stock market correction and slower vehicle sales due to strikes in the auto industry, estimating that consumption would have risen 0.4 percent without those two factors and expecting it to recover in the fourth quarter or early next year.
Outlook for annual growth
Cumulative growth over the first three quarters of 2026 was about 3.6 percent year-on-year. The Bank of Korea said annual growth would be 3.6 percent even if the economy registers no quarterly growth in the fourth quarter, and could reach 4 percent if fourth-quarter growth is 1.4 percent, making it likely the bank will raise its annual growth forecast of 3.3 percent.
In financial markets, the Seoul KOSPI main index closed Tuesday up 3.09 percent at 5,638.34 points, after days of a jump in South Korea's exports to a record level driven by chips.
