South Korea’s economy grew 1.0% in the third quarter, above forecasts, as strong chip exports and investment lifted growth despite a fall in household spending.
The Bank of Korea’s preliminary estimate showed gross domestic product (GDP) rose after growing 0.6% in the previous quarter. The 1.0% growth beat economists’ median forecast of 0.7%. It also exceeded the bank’s 0.3% projection.
Exports rose 2.3% from July to September, led by chips, machinery and electrical equipment. Investment in facilities rose 4.1%. Purchases of machinery, including equipment used to make chips, helped drive the increase.
A Bank of Korea official said chips made up about half of the quarter’s growth. This showed the industry’s key role in the expansion. Worldwide demand for chips is strong amid the artificial intelligence boom.
Private consumption fell 0.2% as spending on goods and services weakened. This was its first quarterly decline in nearly four years. Compared with a year earlier, GDP grew 3.4%, down from 3.7% in the second quarter.
Overall, exports and business investment were the main drivers of growth, while household spending lagged. The preliminary estimate may be revised when more data become available.