A container ship sails past buildings in Busan, South Korea, on Thursday, Sept. 22, 2022. Photographer: SeongJoon Cho/Bloomberg via Getty Images
Bloomberg | Bloomberg | Getty Images
South Korea’s economy expanded at its fastest pace in more than a year, with its third-quarter gross domestic product growth topping analysts’ estimates on Tuesday.
According to advance estimates from Bank of Korea, GDP rose 1.7%, year on year, compared to the 1.5% rise expected by economists polled by Reuters. The economy had grown by 0.6% in the second quarter.
Data from the Bank of Korea revealed that growth was mostly supported by exports and the manufacturing sector that expanded 6% and 3.3%, respectively, year on year.
Construction sector was the biggest drag on the economy, contracting 8.1% in the reported quarter compared to a year earlier.
The growth in exports of goods and services, which came on the back of increased semiconductor and motor vehicle shipments, was the fastest since the third quarter of 2024.
On a quarter-on-quarter basis, the country’s GDP expanded 1.2%, also beating Reuters poll estimates of a 0.9% growth.
South Korea’s GDP data comes as the country’s negotiators continue to wrangle over details of a trade deal with the Trump administration. In an interview with Bloomberg last Friday, South Korea’s President Lee Jae Myung said that the two country’s were deadlocked on key details over Seoul’s $350 billion investment pledge.
“The U.S. will of course try to maximize its interests, but it mustn’t be to the extent that causes catastrophic consequences for South Korea,” Lee said in the interview.
In July, South Korea reached a trade deal with Trump that featured blanket tariffs on the country’s exports to U.S. at 15% — down from the 25% Trump announced earlier. In return, Seoul had pledged to invest $350 billion in the U.S.
Lee is set to meet Trump on the sidelines of the Asia-Pacific Economic Cooperation summit being held in Gyeongju, South Korea, later this week.
The Bank of Korea in its statement last Thursday said that the economy has continued to improve, supported by a sustained recovery in consumption and favorable exports growth.
“Going forward, domestic demand is expected to continue its recovery, led by consumption, and exports are likely to remain favourable for some time owing to the strong semiconductor sector, but the impacts of U.S. tariffs on exports are likely to expand gradually,” the BOK added.
The central bank has forecast full-year growth for 2025 at 0.9%, and 1.6% for 2026
