COVER STORY Chip exports drive Korea's Q3 growth to 1%, triple BOK forecast

Korea's economy expanded 1 percent in the third quarter from the previous quarter, extending its stronger-than-expected growth on the back of booming semiconductor exports, the Bank of Korea (BOK) said Tuesday.

After exceeding expectations in the first and second quarters, the economy continued to outperform forecasts in the third quarter, putting annual growth within reach of 3 percent, with some saying it may even reach up to 4 percent.

Preliminary data from the central bank showed that real gross domestic product (GDP) rose 1 percent in the July-September period, significantly exceeding the BOK's own projection of 0.3 percent for the quarter.

The country's quarterly growth rebounded sharply to 1.8 percent in the first quarter from a 0.1 percent contraction in the fourth quarter of 2025, before standing at 0.6 percent in the second quarter, also beating expectations.

In the third quarter, facilities investment rose 4.1 percent, mainly on increased investment in machinery, including semiconductor manufacturing equipment. Investment in intellectual property products grew 2.3 percent as spending on research and development and software increased.

Exports grew 2.3 percent, driven mainly by semiconductors and electrical equipment. Imports rose 2.4 percent, led by increases in crude oil and semiconductor manufacturing equipment.

By industry, manufacturing grew 2 percent, led by computers, electronic and optical equipment, as well as machinery and equipment.

Agriculture, forestry and fisheries rose 5.9 percent, led by crop cultivation and fishing. Services edged up 0.2 percent, supported by business services, information and communications, and transportation.

The stronger-than-expected growth is likely to prompt the BOK to raise its 3.3 percent growth forecast for this year, announced in August. The central bank is scheduled to release its revised forecast in November.

Lee Dong-won, director general of the BOK's economic statistics department, said an annual growth of 4 percent remained possible depending on the economy's performance in the fourth quarter.

If achieved, it would mark the highest annual growth rate in five years, since the economy expanded 4.7 percent in 2021.

"Even if growth in the fourth quarter is flat compared with the previous quarter, annual growth would mathematically come to 3.6 percent. If the economy grows 1.4 percent or more in the fourth quarter, an annual growth of 4 percent would be possible," Lee said during a briefing.

"Computers and electronic equipment, including semiconductors, accounted for about 60 percent of GDP growth from a year earlier, with semiconductors alone estimated to have contributed about half."

The Ministry of Finance and Economy said the latest GDP data makes it almost certain that Korea will achieve a per capita gross national income (GNI) of $40,000 this year.

The Korean won's appreciation against the U.S. dollar and an upward revision to the GDP growth outlook are both contributing to the increase in per capita GNI.

"The country's per capita income, which has remained in the $30,000 range, is expected to rise to the $40,000 range. It is encouraging that there is further momentum for it to rise even higher," a ministry official said during a briefing.

Per capita GNI is calculated by taking the total income earned by a country's residents at home and abroad and dividing it by its population. It is commonly converted into U.S. dollars to compare living standards across countries.

If achieved, the milestone would come 12 years after Korea's per capita GNI first surpassed $30,000 in 2014.