South Korea Q3 GDP Grows 1.2% on Strong Exports Consumption

South Korea's economy experienced its fastest growth in a year and a half during the third quarter of 2025, with GDP expanding by 1.2% quarter-on-quarter, surpassing forecasts. This growth was driven by a 1.3% rise in private consumption, supported by government stimulus measures including supplementary budgets and cash subsidies under President Lee Jae Myung's administration, as well as a 2.4% rebound in capital expenditure. Exports, particularly in semiconductors and automobiles, increased by 1.5%, although this marked a slowdown from the previous quarter's 4.5% gain. Despite the positive momentum, economists warn that the recovery remains fragile, heavily reliant on policy support, and vulnerable to potential U.S. tariffs on Korean cars and auto parts amid unresolved trade negotiations. The Bank of Korea projects full-year economic growth of around 0.9% to 1.0%, contingent on semiconductor industry performance and trade developments, with expectations for slower growth in the fourth quarter. Construction investment continued its decline, extending a six-quarter streak of decreases, while manufacturing growth was led by transport equipment and electronics sectors.