South Korea: GDP outlook strengthened by AI cycle – DBS

Solid preliminary 3Q GDP growth and strong exports, led by semiconductor shipments, are the focus of DBS Group Research economist Ma Tieying’s assessment of South Korea’s economy. Private consumption, however, weakened following the KOSPI correction. Finding that the AI-driven growth cycle remains intact, the report raises South Korea’s GDP growth forecasts to 3.8% for 2026 and 2.9% for 2027.

AI-led growth supports higher forecasts

"South Korea’s preliminary 3Q GDP estimate, released this morning, came in stronger than expected. Year-on-year growth remained solid at 3.4% in 3Q, moderating slightly from 3.7% in 2Q and 3.8% in 1Q."

"On a QoQ saar basis, growth also remained firm at 3.9%, compared with an average of 5.0% in 1Q–2Q.Exports of goods and services rose by a strong 9.6% QoQ saar, supported by robust semiconductor shipments."

"Private consumption, however, declined by 1.0%, amid the sharp KOSPI correction since July following the introduction of leveraged ETF regulations.Overall, the 3Q GDP data corroborate our view that the AI-driven growth cycle remains intact, while the equity market correction may have contributed to a temporary divergence between exports, investment and domestic consumption."

"We revise up our 2026 GDP growth forecast to 3.8% from 3.5%, and our 2027 forecast to 2.9% from 2.4%."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)