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South Korea's First-Quarter GDP Rises 3.8% Year Over Year on Chip Surge

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South Korea's First-Quarter GDP Rises 3.8% Year Over Year on Chip Surge

South Korea's economy expanded 3.8% in the first quarter from a year earlier, according to data released Tuesday by the Bank of Korea.

The latest print accelerated from 1.6% growth in the fourth quarter of 2025, beating the consensus forecast of 3.6% tracked by Investing.com.

On a quarter-over-quarter basis, the Bank of Korea revised its advance estimate upward by 0.1 percentage point to 1.8%, rebounding from a 0.1% contraction in the previous quarter. The quarterly figure also topped the consensus forecast of 1.7%.

The latest data confirmed a semiconductor-led surge that the Bank of Korea reported in its advance estimate in April. Major players in the semiconductor field include Samsung Electronics (KRX:005930) and SK Hynix (KRX:000660).

Exports of goods and services rose 11.8% year over year in the first quarter, significantly faster than the 4.6% jump in the fourth quarter of 2025, according to the latest data.

Imports of goods and services likewise jumped 8.5% from a year earlier in Q1, also accelerating from the 3.9% increase in Q4 2025.

Elsewhere, manufacturing output climbed 7.2% year over year, versus the 2.4% increase in Q4 2025. The agriculture, forestry and fishing sector rose 3.5% in Q1 from a year earlier, reversing the 0.5% dip in Q4 2025.

Output from the electricity, gas and water supply sector contracted for the fourth straight quarter in Q1, dropping 5% after the 4.4% slide in Q4 2025.

On the expenditure side, private consumption rose 2.7% year over year in Q1 after growing 2.4% in Q4 2025, while government spending jumped 3.1%, slowing from the 3.6% expansion previously.

ING Think Senior Economist for South Korea, Min Joo Kang, wrote in an April 23 note that growth is expected to slow in the second quarter.

"We expect strong chip momentum to continue, but also a slowdown in 2Q26 growth as energy disruptions affect activity across petrochemicals and other manufacturing sectors."

"The Korean government implemented a temporary export ban on Naphtha, and Korean companies increased oil and gas imports from outside the Middle East. Despite these measures, manufacturing activity still cannot be sustained at full capacity," Min added.

Meanwhile, Stephen Lee, an economist at Meritz Securities in Seoul, expects stronger export momentum in the third quarter and export growth of around 50% for the full year.

"It is truly an unprecedented pace, raising market expectations again and again and ​exceeding them again and again," Lee was quoted by Reuters as saying last week.

The Bank of Korea recently raised its economic growth forecast for the country to 2.6% this year from its previous 2% growth outlook, citing the semiconductor boom.

BOK Governor Shin Hyun-song expects strong exports to contribute 0.7 percentage points to the country's GDP growth in 2026, Yonhap reported May 28, citing a press conference.

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