South Korea’s GDP growth beats forecasts amid AI boom

SaveSharefacebookxwhatsapp-strokecopylinkThe Han River and the Seoul Tower are seen from the Lotte World Tower at dusk in Seoul, South Korea [File: Greg Baker/AFP]By John PowerPublished On 27 Oct 202627 Oct 2026South Korea’s economy grew much faster than expected in the July-September quarter amid booming demand for chips used in artificial intelligence (AI).Gross domestic product (GDP) expanded 1 percent on a quarterly basis, or 3.4 percent year-on-year, advance estimates released by the Bank of Korea showed on Tuesday.Recommended Stories list of 4 itemslist 1 of 4Bolsonaro’s party accepts Brazil election after Trump calls vote ‘rigged’list 2 of 4Trump suggests renaming the Atlantic Ocean the ‘American Ocean’list 3 of 4Russia halts strikes on Ukraine’s Kherson as Oleshky ceasefire takes effectlist 4 of 4Moroccan police intercept migrant swimming back towards Ceutaend of listThe Bank of Korea forecast in August that GDP would grow 0.3 percent in the third quarter.Exports, which account for about 45 percent of South Korea’s GDP, rose 2.3 percent quarter-on-quarter, driven by semiconductors, machinery and electrical equipment, according to the central bank.Investment in facilities and intellectual property rose 4.1 percent and 2.3 percent, respectively, while investment in construction edged up 0.7 percent.Despite the robust growth in exports and investment, private consumption fell 0.2 percent.The latest results put the South Korean economy well on track to achieve its biggest economic expansion in more than a decade.South Korean Finance Minister Lee Hyoung-il said earlier this month that he expected growth to reach 3.4-3.6 percent in 2026, which would be the strongest performance since 2011, excluding the COVID-19 pandemic.South Korea’s economy grew 1 percent in 2025, its slowest expansion since the pandemic.Asia’s fourth-largest economy has capitalised on the AI boom amid a global shortage of memory chips.South Korea is home to two of the three largest memory chip makers, SK Hynix and Samsung Electronics, which together control roughly 80 percent of the global market for high-bandwidth memory and 60 percent of the market for dynamic random-access memory.South Korea’s exports in September surged 83.5 percent year-on-year to $120.9bn, with chips accounting for nearly half of all shipments, according to the Korea Customs Service.