South Korea’s economy grew faster than expected in the third quarter of 2026, supported by strong semiconductor exports and rising investment in technology equipment. 

The country’s gross domestic product (GDP) increased 1% from the previous quarter. The growth highlights how rising global demand for artificial intelligence (AI) infrastructure is supporting the country’s economy. 

South Korea is a major producer of memory chips used in AI servers, data centres and other advanced computing systems. As companies worldwide invest in AI technology, demand for these chips has increased, benefiting South Korean exporters.

Exports rose 2.3% in the July-September quarter, supported by semiconductors, machinery and electrical equipment. Investment in facilities also climbed 4.1%, mainly due to spending on machinery and semiconductor manufacturing equipment.

The economy expanded 0.6% in the second quarter, making the latest 1% growth a clear improvement. On a year-on-year basis, GDP increased 3.4%, compared with 3.7% in the previous quarter.

South Korea’s exports exceeded $800 billion during the first nine months of 2026, surpassing the country’s total exports for the whole of 2025. The strong performance puts the country on track to potentially cross $1 trillion in annual exports.

Despite stronger exports and investment, household spending remains under pressure. Private consumption declined 0.2% during the third quarter, marking its first fall in nearly four years.

This shows that the benefits of the AI boom are not reaching every part of the economy equally. Weak domestic demand remains a challenge even as technology-related industries expand.

South Korea’s latest GDP figures underline the importance of AI and semiconductor demand to its economic outlook. Continued investment in data centres and advanced computing could support exports, but weaker consumer spending and global economic uncertainty remain risks.

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