South Korea's economy grew by 1 percent in the third quarter as demand for AI chips boosted exports significantly.
South Korea saw its economy grow faster than experts predicted during the third quarter. The nation’s gross domestic product expanded by 1 percent from the previous quarter. This growth represents a 3.4 percent increase compared to last year.
Also, these official numbers from the Bank of Korea beat earlier forecasts. Experts originally expected growth of only 0.3 percent for this period. The high demand for artificial intelligence technology fueled this major rise.
Next, exports played a huge role in this success. Exports make up about 45 percent of the national economy. Shipments of semiconductors and electrical equipment rose by 2.3 percent this quarter.
Meanwhile, businesses spent more money on new facilities and intellectual property. Investment in these areas grew by 4.1 percent and 2.3 percent. Construction investment also saw a small gain of 0.7 percent.
However, consumer spending did not keep up with this trend. Private consumption actually dropped by 0.2 percent during the quarter. This decline occurred despite the strong performance in other sectors.
After that, the country moved toward its best growth rate in over a decade. Finance Minister Lee Hyoung-il expects full-year growth between 3.4 and 3.6 percent. This would mark the strongest performance since 2011.
Now, the nation is benefiting from the global AI boom. A worldwide shortage of memory chips helps local companies. South Korea hosts major chip makers like Samsung and SK Hynix.
Finally, these two companies control a large portion of the global market. They provide about 80 percent of high-bandwidth memory chips. Exports of these products reached $120.9 billion in September alone.