Economy 3 min read By Bethany Hadley
South Korean economic growth likely accelerated in third quarter on chip exports, poll suggests
A Reuters poll indicates that South Korea's economy probably grew faster in the third quarter, driven by a rebound in semiconductor exports, though the recovery remains uneven across domestic demand.
South Korea's economy is expected to have grown at a faster pace in the third quarter, according to a Reuters poll of economists, as a recovery in semiconductor exports helped offset sluggish domestic demand. The projected acceleration would mark a modest improvement from the previous quarter, when growth was weighed down by weaker consumer spending and construction activity.
The poll suggests that gross domestic product expanded by around 0.5 per cent in the July-to-September period compared with the previous three months, up from a slower pace earlier in the year. On an annual basis, growth is estimated to have remained in the low single digits, reflecting the lingering effects of high interest rates and subdued global trade conditions outside the technology sector.
Chip exports have been the main engine of the recovery. South Korea is home to two of the world's largest memory chipmakers, and demand for advanced semiconductors used in artificial intelligence applications has picked up sharply over the past year. That has helped lift overall export volumes, even as shipments of other goods such as automobiles and petrochemicals have faced headwinds from weaker demand in key markets.
Economists cautioned that the recovery is not yet broad-based. Domestic consumption has remained soft, with households still burdened by high debt servicing costs following an extended period of elevated interest rates. Construction investment has also been slow to recover, and business sentiment among smaller firms remains fragile.
The Bank of Korea has held its policy rate steady in recent months as it balances the need to support growth against concerns about household debt and property market risks. The central bank has signalled that it is watching export momentum closely for signs that the recovery can be sustained without further monetary stimulus.
The third-quarter figures are due to be published later this month. If confirmed, the pickup would reinforce expectations that South Korea's economy is gradually emerging from a period of weak growth, though the pace is likely to remain moderate given the uneven contribution from domestic sectors. A stronger-than-expected reading could also influence the central bank's thinking on the timing of any future rate adjustments.
For policymakers, the challenge is to ensure that the export-led recovery translates into broader economic activity. Without a rebound in consumer spending and investment, growth may continue to rely heavily on a narrow group of technology exporters, leaving the economy vulnerable to shifts in global demand for chips.
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