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South Korea's chip boom fuels forecast-beating third-quarter growth / Photo: © AFP
South Korea's chip boom fuels forecast-beating third-quarter growth
South Korea's economy grew more than three times faster than expected in the third quarter, driven by booming semiconductor demand, central bank data showed Tuesday.
Gross domestic product (GDP) expanded 1.0 percent quarter-on-quarter in July-September, according to preliminary figures from the Bank of Korea (BOK).
The figure exceeded the bank's August forecast of 0.3 percent growth.
The reading was boosted by a 2.3 percent rise in exports, "led by semiconductors, machinery and electrical equipment", the BOK said.
Investment in facilities also jumped 4.1 percent, driven mainly by machinery used in chip-making.
From a year earlier, the economy expanded 3.4 percent, slightly below the 3.7 percent recorded in the previous quarter.
Real gross domestic income (GDI), a measure of purchasing power, surged 18.8 percent year-on-year, its fastest increase in nearly 49 years, helped by rising semiconductor prices.
South Korea's economy recorded its fastest growth in more than five years during the first quarter, expanding 1.7 percent month-on-month thanks to soaring chip demand.
The data validates the "BOK's upbeat assessment ... that booming demand for chips is keeping exports and investment strong", said Kwon Hyo-sung of Bloomberg Economics.
Analysts, however, warned that growth remained dependent on the semiconductor sector.
"The risk is that growth stays heavily concentrated in the semiconductor sector, leaving South Korea exposed to a slowdown in global AI spending," said John Bromhead, a senior economist at Moody's Analytics.
The semiconductor boom has also propelled the country's current account surplus to record levels.
The country recorded a $116.6 billion current account surplus in the second quarter, surpassing the combined surpluses of manufacturing powerhouses Germany and Japan for the first time since comparable records began in 1996.
The International Monetary Fund forecasts South Korea's annual current account surplus will reach $421.9 billion this year, the second-largest among 190 economies after China.
Semiconductor exports surged 218.7 percent year-on-year to $148 billion in the third quarter, according to government data.
Seoul's Kospi stock index opened more than four percent higher on Tuesday, buoyed by a Wall Street rally and revived optimism over the AI boom.
J.Szymanski--GL
