South Korea's GRDP Surges 1.9% in Q3, Fueled by Chip and Auto Exports
South Korea's Q3 2025 GRDP grew 1.9%, driven by strong semiconductor and auto exports. While the service sector recovered, construction slumped for the 6th straight quarter, revealing a K-shaped recovery.
South Korea's export engine is roaring back to life, but a chill remains in the domestic economy. The nation's gross regional domestic product (GRDP) grew 1.9% year-on-year in the third quarter of 2025, a sharp acceleration from the previous quarter's 0.6% rise, according to government data released on December 26. This marks the first time growth has surpassed the 1% threshold since the third quarter of last year.
Exports Power the Manufacturing Surge
The recovery was largely driven by robust outbound shipments of semiconductors, automobiles, and ships. According to the Ministry of Statistics, output in the mining and manufacturing sectors in the greater capital region jumped 7% from a year earlier, far exceeding the national average increase of 4.2%. This performance underscores the continued strength of South Korea's key export industries in the global market.
A Tale of Two Economies: Services Revive, Construction Slumps
The domestic economy presents a divided picture. The service sector showed clear signs of recovery, expanding 2.2% on-year, buoyed by wholesale, retail, and financial services. Notably, the accommodation and food services industry grew 1.6%, snapping a nine-quarter streak of contraction that began in Q2 2023.
In stark contrast, the construction sector continued to struggle, with its GRDP falling 7.3%. It's the sector's sixth straight quarter of contraction. However, there's a sliver of hope as the pace of decline has eased since the first quarter, when output plunged by 12.3%.
Despite the positive headline number, the prolonged slump in construction could act as a drag on the broader domestic economy. Investors should be cautious about viewing this as a full-throated recovery, as weakness in a key domestic sector can impact asset markets and employment.
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