South Korea’s economy recorded its fastest growth in a year and a half during the third quarter, driven by robust exports and resilient consumer spending. According to preliminary data from the Bank of Korea (BOK), the nation’s gross domestic product (GDP) expanded by 1.2% on a seasonally adjusted basis from the previous quarter—outpacing both the 0.9% forecast in a Reuters poll and the 0.7% growth seen in the second quarter.
The growth momentum was fueled by a 1.3% rise in private consumption, supported by government stimulus measures under President Lee Jae Myung’s administration. Supplementary budgets and cash subsidies encouraged household spending, while capital expenditure rebounded 2.4% after a prior decline. On an annual basis, GDP grew 1.7%, accelerating from 0.6% in the previous quarter.
Exports—particularly semiconductors—expanded 1.5% quarter-on-quarter, though this marked a slowdown from the 4.5% gain in Q2. Economists warn, however, that South Korea’s growth remains fragile and heavily reliant on policy support. Trade uncertainties, especially potential U.S. tariffs on Korean cars and auto parts, could threaten export momentum. Seoul and Washington remain divided over details of a $350 billion investment package, raising concerns about future trade friction.
Stephen Lee, an economist at Meritz Securities, predicts growth could ease to around 0.5% in the fourth quarter as external risks increase. A BOK official noted that overall growth could still reach around 1.0% in 2025, depending on semiconductor performance and the impact of U.S. trade policies.
The BOK expects South Korea’s economy to expand by 0.9% for the full year—marking its slowest pace since the 0.7% contraction in 2020—highlighting the challenges Asia’s fourth-largest economy faces amid global uncertainty and shifting trade dynamics.