Seoul: The South Korean economy expanded at the fastest pace in 1 1/2 years in the third quarter, supported by solid exports and rising private consumption, central bank data showed Tuesday. Real gross domestic product (GDP), a key gauge of economic growth, rose 1.2 percent in the July-September period from the previous quarter, preliminary data from the Bank of Korea (BOK) showed.
According to Yonhap News Agency, this marked the fastest quarterly expansion since the first quarter of 2024, when the economy also grew 1.2 percent, and it was an increase from a 0.7 percent on-quarter rise in the second quarter. The third-quarter figure surpassed the BOK's expectation of a 1.1 percent gain. On a year-over-year basis, the economy expanded 1.7 percent in the third quarter, accelerating from a 0.6 percent increase in the previous quarter.
The country's GDP unexpectedly contracted 0.2 percent in the first quarter, as a domestic political crisis sparked by former President Yoon Suk Yeol's martial law declaration, coupled with uncertainties from U.S. President Donald Trump's sweeping tariff measures, weighed on consumer spending and slowed export growth. However, the economy has rebounded due to government stimulus measures and strong exports, particularly in the semiconductor sector.
The BOK projected Asia's fourth-largest economy to grow 0.9 percent this year and is expected to release a revised outlook in November. Rising domestic demand and exports drove the economic expansion in the third quarter. Private consumption rose 1.3 percent, marking the fastest growth since the third quarter of 2022, while government spending climbed 1.2 percent, the highest since the fourth quarter of 2022. Exports increased 1.5 percent from the previous quarter, supported by strong global demand for semiconductors and automobiles.
Facilities investment grew 2.4 percent, while construction investment slipped 0.1 percent. The BOK stated that domestic demand and net exports contributed 1.1 percentage points and 0.1 percentage point, respectively, to the third-quarter economic growth. By industry, the manufacturing sector expanded 1.2 percent, led by gains in transportation equipment, computers, electronics, and optical devices. The service field grew 1.3 percent, driven by recoveries in wholesale and retail, as well as accommodation and food services. The electricity, gas, and water supply sector rebounded 5.6 percent following a 5.4 percent contraction in the previous quarter, the data showed.