South Korea’s economy grows 1% in third quarter as chip demand helps beat forecast

South Korea’s economy grew 1.0% in July–September 2026, sharply exceeding the central bank’s 0.3% forecast. Bank of Korea advance estimates released October 27 showed exports and investment strengthening amid AI-driven chip demand. But private consumption fell, leaving a divide between the country’s export performance and spending at home.

A modest forecast meets a chip-heavy export surge

In August, the Bank of Korea expected the economy to expand just 0.3% from the previous quarter. That forecast followed a weak year: South Korea grew 1% in 2025, its slowest annual expansion since the pandemic.

September’s trade figures showed the strength of overseas demand. Exports climbed 83.5% from a year earlier to $120.9 billion, according to the Korea Customs Service. Chips accounted for nearly half of those shipments.

Al Jazeera linked South Korea’s gains to booming demand for chips used in AI and a global memory-chip shortage. The country is home to Samsung Electronics and SK Hynix, two of the world’s three largest memory-chip makers.

Together, Samsung and SK Hynix control roughly 80% of the global high-bandwidth memory market and 60% of the dynamic random-access memory market, Al Jazeera reported.

Investment rises, but consumption slips

The October GDP release showed exports rising 2.3% across the third quarter compared with the previous three months. Semiconductors, machinery and electrical equipment drove the increase, according to the central bank.

Exports account for about 45% of South Korea’s GDP, giving overseas demand substantial weight in the economy. Investment also strengthened: facilities investment rose 4.1%, intellectual-property investment increased 2.3%, and construction investment edged up 0.7%.

Private consumption fell 0.2% even as exports and investment rose.

The annual outlook is still a forecast

Measured against July–September last year, GDP grew 3.4%.

Earlier in October, Finance Minister Lee Hyoung-il said he expected 2026 growth of 3.4%–3.6%. That would be South Korea’s strongest performance since 2011, excluding the pandemic period. The third-quarter expansion supports that stronger outlook, but the minister’s range remains an expectation—not a full-year result established by this release.