The fastest growth in over a year! Exports drive South Korea's economy to exceed expectations with a 1.7% year-on-year GDP growth in the third quarter

According to the Zhitong Finance APP, data released on Tuesday showed that the South Korean economy achieved its fastest growth in over a year, with third-quarter GDP growth exceeding analysts' expectations. According to preliminary estimates from the Bank of Korea, the GDP grew by 1.7% year-on-year in the third quarter, while economists had expected a growth rate of 1.5%. The economy grew by 0.6% in the second quarter. Data from the Bank of Korea indicates that economic growth was mainly driven by exports and manufacturing. Specifically, exports grew by 6% year-on-year, and manufacturing grew by 3.3% year-on-year. The construction industry was the biggest drag on economic development, shrinking by 8.1% compared to the same period last year during the quarter covered by the report. The growth in goods and services exports was attributed to an increase in semiconductor and automobile shipments, marking the fastest growth since the third quarter of 2024. On a quarter-on-quarter basis, the actual GDP grew by 1.2% in the third quarter. This is the fastest quarterly growth since the first quarter of 2024 (when the economy grew by 1.2%), surpassing the 0.7% quarter-on-quarter growth in the second quarter of this year. The third-quarter data also exceeded the Bank of Korea's expected growth of 1.1%. As the GDP data was released, the country's negotiators were still debating the details of the trade agreement reached with the Trump administration. Last Friday, South Korean President Lee Jae-myung stated in an interview that the two countries were at an impasse over key details of the $350 billion investment commitment proposed by Seoul. Lee Jae-myung stated in the interview: "The United States will certainly do its best to protect its own interests, but it must not reach a level that would lead to catastrophic consequences for South Korea." In July, South Korea reached a trade agreement with Trump, which stipulated that South Korea would impose a 15% tariff on all goods exported to the United States—this is a reduced version of the 25% tariff previously announced by Trump. In return, Seoul committed to investing $350 billion in the United States. Lee Jae-myung is scheduled to meet with Trump later this week during the Asia-Pacific Economic Cooperation summit in South Korea. In a statement last Thursday, the Bank of Korea indicated that the economic situation continues to improve, thanks to a sustained recovery in consumption and strong export growth. The Bank of Korea forecasts an annual economic growth rate of 0.9% for 2025 and 1.6% for 2026. The Bank of Korea added: "Looking ahead, domestic demand is expected to continue recovering, mainly driven by consumption, while the export situation is expected to remain favorable for some time due to the strong performance of the semiconductor industry, although the impact of U.S. tariffs on exports may gradually expand."