South Korea's Economy Slows; Chips Keep Driving Growth

Dow Jones07-23

South Korea's economy slowed in the second quarter after robust first-quarter growth, but remained resilient as brisk chip exports offset weak private consumption and construction investment.

Asia's fourth-largest economy expanded 0.6% in the April-June period from the previous quarter, following revised growth of 1.8% in the first quarter, preliminary data from the Bank of Korea showed Thursday.

On a year-over-year basis, the economy grew 3.7% in the second quarter, compared with revised growth of 3.8% in the previous quarter.

The latest gross domestic product figures beat market expectations. Economists surveyed by The Wall Street Journal had forecast growth of 0.4% on quarter and 3.4% on year.

Exports remained the main driver of growth amid robust demand for semiconductors fueled by the artificial-intelligence boom. The country is home to memory-chip makers Samsung Electronics and SK Hynix, making it a prime beneficiary of the global AI build-out.

Chip and machinery exports, along with investment in research and software development, sustained solid growth in the second quarter, while private consumption weakened and construction investment contracted.

Although the economy lost some momentum in the quarter, analysts and policymakers remained upbeat about export-led growth for the rest of the year.

The Korean government earlier this month raised its annual growth forecast for the country. The finance ministry now expects the economy to grow 3.0% this year, up from its earlier estimate of 2.0% growth.

The Bank of Korea is also set to revise up its 2026 growth forecast of 2.6% for the country next month, BOK Gov. Shin Hyun-song said at a policy meeting last week.

As strong chip-led exports and related manufacturing activity continue to support the economy, potential additional fiscal stimulus later this year and investment in technology infrastructure could provide a further boost to growth, Citigroup economist Jin-Wook Kim said in a recent note.

Citi has raised its 2026 growth forecast for the country to 3.5% from its earlier estimate of 3.1%.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

(END) Dow Jones Newswires

July 22, 2026 19:15 ET (23:15 GMT)

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South Korea's Economy Slows; Chips Keep Driving Growth

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