By Renusri K
BENGALURU, Oct 23 (Reuters) – South Korea’s economy grew slightly faster in the third quarter than in April to June, as booming semiconductor exports and AI-related investment helped offset still-uneven domestic demand, a Reuters poll of economists showed.
An AI-fuelled chip boom has supported South Korea’s economy for years, but has also made it increasingly reliant on chip exports, with the gains yet to spread widely through the domestic economy. Meanwhile, high borrowing costs and elevated household debt have weighed on household consumption.
Exports rose 84% from a year earlier to a record $120.9 billion in September, led by a 262.8% surge in chip exports to $60.3 billion. Semiconductors accounted for nearly half of total shipments, underlining the industry’s outsized role in driving gross domestic product growth.
The economy grew a seasonally adjusted 0.7% in the July-September quarter, according to the median forecast of 16 economists polled from October 14-23, a slight pickup from 0.6% growth in the April-June quarter. Forecasts ranged from 0.5% to 1.6%.
“The question is whether we will see benefits from the export sector. It is important to see the transmission to the domestic economy, and one of the key channels is fiscal policy to ease the pressures,” said Jeong Woo Park, Asia economist at Nomura.
“Financial conditions are becoming less accommodative and the labour market is structurally in downturn. With companies adopting AI more rapidly, for the younger generation it is very hard to find jobs,” Park said.
The contrast between the fast-growing chip sector and softer demand elsewhere in the economy has raised concerns among some economists that the recovery, which began in the first quarter, is becoming increasingly uneven.
On a year-on-year basis, GDP was forecast to grow 3.0%, slowing from 3.7% in the previous quarter, based on the median estimate from 16 economists.
“The concentration risk of growth being driven by AI should worry the BOK to some extent, but I don’t think they are showing it too much,” said Kelvin Lam, senior economist at Pantheon Macroeconomics. “The Korean economy is very vulnerable to this as everything now is driven mainly by the semiconductor industry.”
The Bank of Korea held its benchmark interest rate at 3.00% on Thursday, in line with consensus expectations, and raised its growth forecast to 3.3% for this year and 2.9% for next year.
A separate Reuters poll forecast growth of 3.5% in 2026.
(Reporting by Renusri K; Polling by Pranoy Krishna and Rahul Trivedi in Bengaluru and Jihoon Lee in Seoul; Editing by Vivek Mishra, Hari Kishan)
