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The Bank of Korea released advance estimates on October 27 showing that real gross domestic product expanded 1 percent on a quarterly basis in the July-September period after a 0.6 percent increase in the second quarter. Growth from a year earlier stood at 3.4 percent following a 3.7 percent pace three months earlier. The central bank had projected 0.3 percent quarterly growth in its August forecast while the economy contracted 0.1 percent in the final quarter of 2025 before rebounding with 1.8 percent expansion in the first quarter of 2026.
Exports increased 2.3 percent from the prior quarter and imports rose 2.4 percent while government consumption advanced 1.9 percent according to the Bank of Korea. Facilities investment grew 4.1 percent on semiconductor production equipment and construction investment climbed 0.7 percent. Private consumption declined 0.2 percent for the first time in nearly four years as the central bank data indicated net exports contributed 0.1 percentage point to quarterly growth and domestic demand added 0.9 percentage points.
Manufacturing expanded 2.0 percent and the electricity gas and water supply sector grew 3.7 percent in the third quarter the Bank of Korea reported. Lee Dong-won director general of the Bank of Korea’s Economic Statistics Department said semiconductors accounted for roughly half of the quarter’s overall economic growth. Computers electronics and optical equipment contributed about 60 percent of the year-on-year expansion with chips responsible for an estimated half of that share.
Real gross domestic income rose 3.4 percent from the previous quarter and increased 18.8 percent from a year earlier according to Bank of Korea figures. That annual gain marked the strongest performance since the fourth quarter of 1977. The improvement reflected enhanced purchasing power generated by the export performance.
Cumulative growth for the first three quarters reached 3.6 percent year-on-year the Bank of Korea data showed. Lee stated at a briefing that if fourth-quarter growth is zero then annual expansion would come in at 3.6 percent while growth of 1.4 percent or higher in the final period could lift the full-year rate to 4 percent. The central bank plans to release a revised annual forecast in November after projecting 3.3 percent growth in August.
The Bank of Korea noted that the economy expanded 1 percent for all of 2025 amid weakness in facility investment and construction activity. Lee added that exports and investment are expected to remain supportive in the fourth quarter while the path of private consumption will influence the final annual outcome. The third-quarter figures mark the third consecutive period in which growth has surpassed the central bank’s projections.
