South Korea’s Economy Expands on Strong Exports and Consumer Recovery

South Korea’s economy posted steady growth in the third quarter, supported by resilient exports and improving household consumption, according to a Reuters poll. Economists projected Asia’s fourth-largest economy to have expanded 0.9% quarter-on-quarter between July and September, maintaining momentum from the previous quarter’s solid performance. On a yearly basis, GDP was expected to rise 1.5%, up from 0.6% growth in the April-June period.

Analysts said domestic demand is showing gradual improvement, with consumption rebounding and export performance exceeding expectations thanks to booming semiconductor demand. “Despite construction investment continuing to decline sharply, exports are benefiting from strong global chip demand,” said Kelvin Lam, senior economist at Pantheon Macroeconomics.

Exports surged 12.6% in September, marking the fastest increase in over a year, driven by the AI-fueled semiconductor market. The government’s 31.8 trillion won supplementary budget, approved in July, also provided a boost to consumer spending and overall demand.

The Bank of Korea kept its benchmark interest rate unchanged at 2.50% on Thursday to balance risks in the housing sector and stabilize the weakening won, which recently hit a six-month low against the U.S. dollar. Although many economists previously anticipated a rate cut next month, several now expect the central bank to delay easing until early 2026. “A November rate cut seems unlikely as the bank monitors the impact of new property curbs,” said Shivaan Tandon, Asia economist at Capital Economics.

Meanwhile, negotiations over a major trade deal between Seoul and Washington remain unresolved. The U.S. is pressing for a $350 billion upfront investment, but South Korea has resisted, citing foreign reserve constraints. Economists suggest extending the investment timeline and allowing early cash flow repatriation could help finalize the agreement.