South Korea’s nominal gross domestic product expanded at its fastest pace in 47 years during the second quarter, supported by strong semiconductor exports and rising artificial intelligence investment.
Data from the Bank of Korea showed that the country’s economy continued to benefit from strong global technology demand.
South Korea Nominal GDP Surges in Q2
Nominal GDP increased 9.2% quarter-on-quarter in the three months through June.
On an annual basis, nominal GDP jumped 26.4%, marking the fastest increase since the third quarter of 1979.
At that time, nominal GDP had risen 27.7%.
The latest figures underline the strength of South Korea’s technology-driven economy, particularly as semiconductor demand remains elevated.
Real GDP Growth Meets Expectations
Real GDP, which removes the impact of price changes, rose 0.6% from the previous quarter.
The figure matched both the Bank of Korea’s earlier estimate and economists’ expectations.
On a year-on-year basis, real GDP expanded 3.7%.
That was slightly higher than the 3.6% growth recorded in the first quarter and was also in line with forecasts.
Semiconductor Exports Continue to Support Growth
Exports increased 1.3% quarter-on-quarter during the second quarter.
However, this represented a slowdown from the 5.9% increase recorded in the first three months of the year.
Despite the slower pace, strong global demand for semiconductors, machinery and equipment continued to support South Korean shipments.
The figures highlight the importance of the global semiconductor cycle to South Korea’s economic recovery.
Demand related to artificial intelligence has also boosted investment in advanced chips and technology infrastructure.
AI Investment Strengthens South Korean Economy
Artificial intelligence has become another important driver of economic activity.
Growing investment in AI infrastructure has supported demand for South Korea’s semiconductor industry, which plays a major role in global memory chip production.
The combination of semiconductor exports and AI-related investment has helped offset weakness in other areas of the economy.
South Korea National Income Rises Sharply
The strength of the economy was also reflected in national income data.
Per-capita gross national income increased 8.8% quarter-on-quarter and 26.4% year-on-year in nominal terms.
Real gross national income rose 3.1% from the previous quarter and 15.6% compared with the same period a year earlier.
The annual increase in real GNI was the strongest since the fourth quarter of 1988.
At that time, real GNI increased 15.7%.
Bank of Korea Raises 2026 Growth Forecast
The strong economic performance prompted the Bank of Korea to raise its economic growth outlook.
The central bank now expects South Korea’s economy to expand 3.3% in 2026.
It cited strong exports and the continuing semiconductor supercycle as major factors behind the upgraded forecast.
Growth is expected to moderate to 2.9% in 2027.
Bank of Korea Raises Interest Rates
The Bank of Korea raised its Base Rate by 25 basis points to 3.00% on August 27.
The central bank pointed to stronger-than-expected economic growth, resilient exports and an improvement in domestic demand.
It also expects consumer inflation to average 2.7% in 2026.
The combination of stronger growth and persistent inflation has increased expectations that monetary policy may remain relatively restrictive.
South Korean Won and KOSPI Gain
Financial markets responded positively to the economic data.
The South Korean won strengthened around 0.3% against the US dollar, with USD/KRW trading near 1,340.35.
Meanwhile, the KOSPI stock market index climbed 1.16% to 7,076.76.
The gains reflected investor optimism surrounding South Korea’s economic outlook and continued strength in the technology sector.
South Korea Economy Benefits From Semiconductor Supercycle
South Korea’s latest GDP figures show how important semiconductors and artificial intelligence have become to the country’s economic expansion.
Strong technology exports, rising AI investment and improved domestic demand are supporting growth.
However, the outlook will remain closely tied to global semiconductor demand, inflation trends and future Bank of Korea interest-rate decisions.
For now, South Korea’s technology sector continues to provide a powerful source of momentum for the broader economy.
