"Surprise Growth in Korean Economy Continues Thanks to Semiconductors" [Weekend Money]

Surging Semiconductor Exports

Fueling Surprise Economic Growth Prospects for the Second Half

There is an outlook that the South Korean economy will continue to grow solidly in the second half of 2026, following the first half, thanks to increased semiconductor exports.

According to the report "Growth Rate Surprise Driven by Semiconductors to Continue" released by iM Securities on July 26, 2026, the domestic gross domestic product (GDP) growth rate for the second quarter of 2026 reached 0.6% quarter-on-quarter and 3.7% year-on-year, surpassing the market consensus of 0.4% quarter-on-quarter and signaling a surprise in growth.

Park Sanghyun, Senior Expert at iM Securities, explained, "The fact that the domestic growth rate was robust in the second quarter despite the first quarter’s sharp GDP surge of 1.8% quarter-on-quarter indicates that strong growth momentum is being sustained."

Park emphasized, "The driving force behind the domestic growth rate continues to be the export momentum powered by the semiconductor super-cycle. The contribution of goods and services exports to second-quarter growth stood at 0.7 percentage points, which is encouraging when considering the favorable results in the first quarter."

He stated, "Although external uncertainties such as risks related to Iran remain, we expect South Korea's growth rate to maintain a solid trend in the second half of 2026. We forecast the annual GDP growth rate for this year to reach 3.6%."

Park further commented, "The growth trend centered on robust semiconductor exports is expected to continue into the second half. Given the ongoing artificial intelligence (AI) investment cycle led by the United States, the boom in semiconductor exports is highly likely to persist. In particular, while rising export prices drove semiconductor exports in the first half, a relative increase in export volumes is expected to propel the semiconductor boom in the second half."

He pointed out that oil price fluctuations are a key variable. "If the situation in Iran prolongs, resulting in persistently high oil prices throughout the second half, this could exert downward pressure on the growth rate. However, if the Iranian issue is resolved within one to two months, a decline in oil prices could act as an upside factor driving growth in the second half," he predicted.

This content was produced with the assistance of AI translation services.