South Korea’s economy grew much faster than expected in the third quarter, helped by strong global demand for computer chips used in artificial intelligence.
Gross domestic product rose 1 percent in the July to September period compared with the previous quarter. On a yearly basis, the economy expanded 3.4 percent.
The figures are advance estimates released by the Bank of Korea on Tuesday, October 27.
The result was well above the central bank’s own forecast. In August, the Bank of Korea projected growth of just 0.3 percent for the third quarter.
Exports and Investment Drive Growth
Exports make up about 45 percent of South Korea’s economy. They rose 2.3 percent from the previous quarter, according to the central bank.
Semiconductors, machinery and electrical equipment led the gains in shipments abroad.
Business investment also climbed. Investment in facilities rose 4.1 percent, while investment in intellectual property grew 2.3 percent.
Construction investment edged up 0.7 percent during the quarter.
Not every part of the economy grew. Private consumption, which measures spending by households, fell 0.2 percent.
On Track for Strongest Year Since 2011
The latest data puts South Korea on course for its biggest economic expansion in more than a decade.
Earlier this month, Finance Minister Lee Hyoung-il said he expected growth of 3.4 to 3.6 percent in 2026.
That would be the country’s strongest performance since 2011, not counting the period affected by the COVID-19 pandemic.
The outlook is a sharp change from last year. South Korea’s economy grew just 1 percent in 2025, its slowest pace since the pandemic.
Asia’s fourth-largest economy has benefited from a global shortage of memory chips as AI demand grows.
South Korea is home to Samsung Electronics and SK Hynix, two of the world’s three largest memory chip makers.
Together, the two companies control roughly 80 percent of the global market for high-bandwidth memory. They also hold about 60 percent of the market for dynamic random-access memory, known as DRAM.
The most recent trade data shows how strong chip demand has been. South Korea’s exports in September jumped 83.5 percent year-on-year to $120.9 billion.
Chips made up nearly half of all shipments that month, according to the Korea Customs Service.
