South Korea GDP Growth Beats Forecasts Amid AI Boom and Strong Chip Demand

Growth outpaces expectations

South Korea’s gross domestic product rose 1 percent from the previous quarter during July-September, according to advance estimates released by the Bank of Korea on Tuesday. Compared with a year earlier, GDP was up 3.4 percent.

The central bank had projected third-quarter growth of 0.3 percent in August. The latest figures put the economy on course for its strongest expansion in more than a decade, according to the report.

Exports and investment rise

Exports, which represent about 45 percent of South Korea’s GDP, increased 2.3 percent quarter-on-quarter. The Bank of Korea attributed the rise to semiconductors, machinery and electrical equipment. Investment in facilities climbed 4.1 percent, while investment in intellectual property advanced 2.3 percent. Construction investment increased 0.7 percent, but private consumption declined 0.2 percent.

AI demand supports chip sector

South Korea has benefited from booming AI-related demand amid a worldwide shortage of memory chips. The country is home to SK Hynix and Samsung Electronics, two of the three biggest memory chip makers.

Together, the companies hold roughly 80 percent of the global high-bandwidth memory market and 60 percent of the dynamic random-access memory market. September exports rose 83.5 percent year-on-year to $120.9bn, with chips making up nearly half of shipments, the Korea Customs Service said.

Outlook follows weak 2025

South Korea’s economy grew 1 percent in 2025, its slowest pace since the pandemic. Finance Minister Lee Hyoung-il said earlier this month that he expected growth of 3.4-3.6 percent in 2026.

Lee said that rate would mark the strongest performance since 2011, excluding the COVID-19 pandemic. The latest quarterly figures show stronger activity, though household consumption moved in the opposite direction.