South Korea’s Q3 GDP Growth Beats Forecasts as Spending Holds up

Reuters

11:45 JST, October 28, 2025

SEOUL, Oct 28 (Reuters) – South Korea’s economy grew in the third quarter by the fastest pace in a year-and-a-half, central bank estimates showed on Tuesday, helped by strong exports and solid private consumption as government stimulus boosted spending.

Gross domestic product expanded 1.2% in the third quarter from three months earlier on a seasonally adjusted basis, faster than the 0.9% expected in a Reuters poll and the 0.7% growth in the previous quarter, preliminary figures showed.

The pickup was driven by solid consumption, which rose 1.3% quarter-on-quarter, after the government’s supplementary budget and cash subsidies rolled out under President Lee Jae Myung’s government. Meanwhile, capital expenditure rebounded 2.4% after contracting in the previous quarter.

Although the brisk growth underscores resilient household spending, analysts say the recovery is fragile and dependent on policy support as President Donald Trump’s tariff policies could lead to slower exports and undermine the economy’s current momentum.

“Growth will slow to somewhere around 0.5% in the fourth quarter from three months earlier,” said Stephen Lee, an economist at Meritz Securities in Seoul.

A Bank of Korea official said Asia’s fourth-largest economy could expand 1.0% this year if the quarterly figure falls in a range of between a 0.1% contraction and a 0.3% expansion in the current quarter.

“It depends on whether current upbeat momentum in the semiconductor industry continues amid U.S. tariff policies, and whether Korean businesses can continue to increase exports to non-U.S. markets,” a BOK official said in a news conference.

Exports expanded 1.5% quarter-on-quarter, slower than the 4.5% growth in the second quarter.

South Korea’s cars and auto parts could be subject to 25% U.S. tariffs rather than the 15% agreed back in July if Seoul and Washington fail to sign a revised trade deal.

The two countries are still sharply divided over the details of a $350 billion investment package, according to Seoul’s trade minister Kim Jung-kwan.

The BOK sees the economy expanding 0.9% this year, the weakest growth since a 0.7% decline in 2020 due to the pandemic.

On an annual basis, South Korea’s economy grew 1.7%, compared with a 0.6% expansion in the second quarter.