South Korea’s Economy Grows 3.4% in Third Quarter, Backed by Chip Exports
Key Facts
South Korea’s gross domestic product grew 3.4% year on year in the third quarter of 2026, exceeding economists’ forecast of 3.0%, according to data reported by Reuters, citing the Bank of Korea. Growth was 3.7% in the second quarter, meaning the annual pace slowed slightly despite beating estimates. On a quarterly basis, exports and facility investment rose, while private consumption contracted. The figures put exports at the forefront of the economy’s growth drivers, as domestic demand data point to a less balanced picture. Demand for semiconductors was among the main factors behind the strength of South Korea’s external trade.
South Korean exports rose 2.3% in the third quarter, driven by demand for semiconductors, machinery and electrical equipment, Reuters reported. Imports increased 2.4% over the same period, while facility investment jumped 4.1%. By contrast, private consumption fell 0.2%, its first decline in about four years. The gap reveals that momentum relied heavily on trade and investment as consumer spending weakened. Export strength alone therefore does not reflect a similar improvement across all components of the economy.
Trade data underscore the importance of the chip sector to this performance: South Korean semiconductor exports rose 262.8% to $60.30 billion in September 2026, according to the Ministry of Trade, Industry and Energy. The value exceeded $60.0 billion for the first time, as memory demand continued to grow and export volumes and prices increased. The surge is consistent with Reuters’ report that semiconductor demand supported third-quarter exports. South Korea’s total exports also exceeded $800 billion in January–September, surpassing the annual record set the previous year. Reuters said exports were on track to exceed $1 trillion in 2026, a trajectory that highlights the weight of external trade in South Korea’s growth story.
In China, industrial company profits and activity indicators provided additional context for the regional picture, but the available figures cover earlier periods and do not confirm a jump in September profits. Profits at industrial enterprises above designated size rose 15.7% in January–August, while August profits alone increased 4.2% year on year, according to China’s National Bureau of Statistics. In the same sector, profits at industrial electronics companies jumped 110% in the first eight months, accounting for 62% of total growth in industrial profits. Profits at high-tech manufacturing companies also rose 54.7% year on year, outpacing overall industrial profit growth. The Chinese government quoted an official at the statistics bureau as saying that the expansion of new technology applications, including artificial intelligence, drove demand in related fields.
China’s official manufacturing Purchasing Managers’ Index improved in September, registering 50.1, up 0.3 percentage points from the previous month and entering expansion territory, according to the National Bureau of Statistics. The production index rose to 51.7, up 1.3 percentage points from the previous month, while the new orders index fell 0.1 percentage points to 50.5. The employment index stood at 48.4, keeping it below the expansion level. The indicators show a mixed picture within manufacturing: stronger production and new orders near the expansion level, alongside continued weakness in employment. The reading provides context on Chinese factory activity without establishing a figure for September profits.