South Korea Q1 Boom

South Korea’s economy grew 1.7% in the first quarter, its fastest quarterly expansion since the third quarter of 2020. (bok.or.kr) The Bank of Korea released the advance estimate on April 23, saying gross domestic product rose 1.7% from the previous quarter and 3.6% from a year earlier. A Reuters poll cited by CNBC had forecast 1.0% quarterly growth and 2.7% annual growth. (bok.or.kr) (cnbc.com) Exports rose 5.1% in the January-to-March period, led by “IT components including semiconductors” used in artificial intelligence infrastructure, according to the central bank. Facility investment increased 4.8%, while private consumption rose 0.5% and government spending edged up 0.1%. (cnbc.com) South Korea is one of the world’s largest chip exporters, so stronger orders for memory and other components used in artificial intelligence servers show up quickly in factory output, exports and corporate earnings. Reuters reported that the quarter’s jump was tied to a global wave of AI investment that lifted semiconductor shipments. (cnbc.com) (money.usnews.com) The surge also highlights how uneven that demand has been. The Korea Development Institute said in its February outlook that exports were being supported by semiconductors even as construction stayed in contraction and manufacturing outside semiconductors remained weak. (kdi.re.kr) That split has been visible in official forecasts for months. In February, the Korea Development Institute projected South Korea’s economy would grow about 1.9% in 2026 after 1.0% in 2025, with stronger semiconductor exports and a recovery in consumption doing most of the work. (kdi.re.kr) The first-quarter data suggest that rebound arrived earlier and more forcefully than expected, but it still rests heavily on one industry. The Bank of Korea’s same release showed real gross domestic income rose 7.5% from the prior quarter, helped by improved trade conditions as chip export prices outpaced import costs. (bok.or.kr) (kdi.re.kr) For now, the clearest signal from Seoul is that artificial intelligence spending is not lifting every economy equally. It is lifting the ones that already make the chips. (money.usnews.com) (kdi.re.kr)