South Korean economy grows 3 times faster than expected in Q3

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.

The country’s gross domestic product (GDP) jumped 1% in the July-September period compared to the previous three months, according to preliminary figures from the Bank of Korea (BOK).

The figure exceeded the central bank’s forecast of 0.3% growth made in August.

Growth was supported by a 2.3% rise in exports, “led by semiconductors, machinery and electrical equipment”, the BOK said.

Investment in facilities also jumped 4.1%, driven mainly by machinery used in semiconductor manufacturing.

From a year earlier, the country’s economy expanded 3.4%, slightly below the 3.7% recorded in the previous quarter.

The country’s real gross domestic income (GDI), a measure of purchasing power, surged 18.8% year-on-year, its fastest increase in nearly 49 years, helped by rising semiconductor prices.

South Korea’s economy recorded its fastest growth in over five years in the January-March period, expanding 1.7% from the previous three months thanks to soaring semiconductor demand.

The semiconductor boom has also propelled the country’s current account surplus to record levels.

The country recorded a US$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% year-on-year to US$148 billion in the third quarter, according to government data.