South Korea’s GDP Grows 1.0% in Q3 Driven by Semiconductor Exports
South Korea’s real gross domestic product grew by 1.0% in the third quarter of 2026, driven by semiconductor-led exports and equipment investments that far outpaced earlier projections by the Bank of Korea, according to data released on October 27 by the Bank of Korea and reported by the Hani.
Third-Quarter Growth Figures and Export Drivers
The Bank of Korea’s preliminary real GDP data for the July-September period shows a 1.0% expansion compared to the second quarter. On a year-over-year basis, the economy grew by 3.4%. These results significantly exceed the central bank’s August economic outlook, which had projected a quarter-over-quarter growth rate of just 0.3% and a 2.6% increase from the previous year.
Export performance anchored the third-quarter expansion. Exports rose 2.3% from the previous quarter, led by semiconductors, machinery, and electrical equipment. Equipment investments surged by 4.1%, fueled primarily by machinery purchases such as semiconductor manufacturing equipment. Government consumption grew by 1.9% on increased spending for goods, services, and health insurance benefits, while construction investments edged up 0.7% due to civil engineering projects. By contrast, private consumption contracted by 0.2% as spending dropped across both goods, including cars and home appliances, and services like finance and dining.
Real Gross Domestic Income Hits Highest Level Since 1977
Real gross domestic income climbed 3.4% quarter-over-quarter, outpacing the 1.0% real GDP growth rate. Compared to the same period last year, GDI increased by 18.8%, marking the highest level since the fourth quarter of 1977, when it reached 19.0%. This income growth stems from higher export prices concentrated in the semiconductor sector. GDI factors in real trading gains and losses from shifting import and export prices, serving as an indicator of the actual economic welfare experienced by citizens.
The consecutive growth seen through the first three quarters of 2026 points to an annual growth rate well above the central bank’s previous 3.3% forecast from August.
Lee Dong-won, head of the Economic Statistics Department II at the Bank of Korea, stated during a briefing that even if the fourth quarter posts zero growth compared to the previous period, the annual growth rate will still reach 3.6%. The Bank of Korea’s Monetary Policy Board noted in an October 22 meeting resolution that robust semiconductor demand continues to support export and investment growth while improving household income conditions to gradually bolster consumer recovery.