South Korea's economy grows 1.0% in third quarter as chip boom lifts exports and investment

South Korea's economy grew 1.0% in the third quarter from the previous three months, up from 0.6% in the second quarter, according to advance estimates from the Bank of Korea released on Tuesday. The figure topped economists' forecasts in Reuters and Bloomberg polls and was well above the central bank's own August projection of 0.3%.

Semiconductors drove about half of the growth, Lee Dong-won, head of the bank's economic statistics department, told a briefing, according to Reuters. Exports rose 2.3% and facility investment jumped 4.1% from the previous quarter, The Korea Herald reported, while Bloomberg noted that private consumption contracted. Lee said annual growth would be 3.6% even if the economy did not grow at all in the fourth quarter, above the bank's full-year forecast of 3.3%.

Why it matters: The data show how heavily South Korea's economy now depends on the AI-driven chip cycle, while weak household spending points to an uneven recovery.