Lee Jae-myung and Trump Discuss Tariff Details Again: Can South Korea's Economy Gain New Momentum?

The latest data from the Bank of Korea shows that, supported by strong exports and rising private consumption, the South Korean economy achieved its fastest growth rate in a year and a half in the third quarter.

Preliminary data from the Bank of Korea indicates that real Gross Domestic Product (GDP) grew by 1.2% quarter-on-quarter and 1.7% year-on-year in the third quarter. This represents the fastest quarterly growth since Q1 2024 (when the economy grew by 1.2%), surpassing the 0.7% quarter-on-quarter growth in Q2 this year and exceeding the Bank of Korea's previous expectation of 1.1%.

Coinciding with the better-than-expected data, South Korean President Lee Jae-myung will hold a bilateral meeting with visiting US President Donald Trump in Gyeongju, North Gyeongsang Province, on the afternoon of the 29th. Pending tariff issues will be a key topic of discussion. From the perspective of South Korea's economic community, the current momentum of the country's economic growth largely depends on the outcome of trade negotiations with the United States.

In the first quarter of this year, due to the impact of domestic political fluctuations and tariff pressure from the US Trump administration, South Korea's GDP unexpectedly contracted by 0.2%, raising significant concerns at the time about the economy falling into stagnation. In the second quarter, GDP growth rebounded to 0.7%, and based on this, market expectations for the third quarter were maintained around 1.0%.

Behind the current Q3 growth rate hitting a new high in a year and a half, exports related to South Korea's semiconductor industry were the primary driver. Breaking down the data, South Korea's chip exports reached $16.62 billion in the third quarter, setting a historical record and surging 21.9% year-on-year. Recently, exploding global demand for AI servers and rising memory chip prices have directly benefited South Korea as a major chip exporter.

South Korea's Ministry of Science and ICT attributes the significant increase in semiconductor-related product exports to rising memory chip prices, driven by continuous investment in AI servers by global companies. Currently, the Bank of Korea forecasts the South Korean economy to grow by 0.9% for the full year.