South Korea’s economy grew substantially faster than expected in the third quarter as global demand for artificial-intelligence hardware strengthened semiconductor exports and business investment.
Gross domestic product expanded 1.0% from the previous quarter, according to advance estimates from the Bank of Korea. That exceeded the 0.7% median forecast in a Reuters poll and accelerated from 0.6% growth in the second quarter. GDP increased 3.4% year over year.
Technology was the principal engine. The Bank of Korea estimated that semiconductors accounted for roughly half of economic growth during the quarter as the global AI investment boom continued supporting chip demand.
Exports increased 2.3%, driven by semiconductors, machinery and electrical equipment. Facilities investment jumped 4.1%, led by semiconductor-manufacturing equipment.
The strength contrasts with a weaker domestic picture. Private consumption declined 0.2%, its first quarterly contraction in nearly four years, highlighting an increasingly uneven expansion.
South Korea’s exports exceeded $800 billion during the first nine months of 2026 and are on course to surpass $1 trillion for the year if current momentum continues.
The Bank of Korea kept interest rates unchanged after consecutive increases in July and September but maintained a relatively hawkish stance while upgrading its assessment of economic growth.
If fourth-quarter GDP remains at its third-quarter level, the central bank estimates that full-year growth could reach approximately 3.7%.
The figures provide unusually direct evidence that the global AI infrastructure boom is moving beyond technology-company earnings and into national economic growth.
For markets, the next indicators to watch are semiconductor exports, capital investment and whether household consumption begins recovering enough to broaden the expansion.
