South Korea growth surge

South Korea’s economy grew 1.7% in the first quarter from the previous three months, its fastest quarterly pace since late 2020. (bok.or.kr) The Bank of Korea said gross domestic product also rose 3.6% from a year earlier in the January-to-March quarter. Goods exports led the gain, while manufacturing and construction both increased. (bok.or.kr) The central bank’s breakdown showed exports added 0.8 percentage point to quarterly growth, and manufacturing rose 2.6% from the prior quarter. Construction climbed 1.5%, after a long stretch of weakness in the property sector. (bok.or.kr) South Korea’s export machine is unusually sensitive to chips because semiconductors are one of its biggest overseas earners. When data-center operators and artificial-intelligence companies buy more memory chips, that demand quickly shows up in Korean factory output, shipments and national growth. (bok.or.kr) The Bank of Korea had already built its 2026 outlook around a stronger chip cycle. In February, it raised its full-year growth forecast to 2.0% from 1.8% in its November projection, citing a “robust semiconductor cycle” and a favorable global backdrop. (bok.or.kr) That optimism has come with a warning. On April 10, the Bank of Korea said the war in the Middle East was creating a supply shock that could weigh on growth even with strong semiconductor demand and a supplementary budget. (bok.or.kr) South Korea’s trade ministry has also been preparing exporters for higher external risk. On April 15, the ministry said it would expand trade-finance support to 10 trillion won by the end of 2026 because uncertainty had risen with the Middle East war. (english.motie.go.kr) The same pressure is hanging over chipmakers’ earnings. Higher oil prices, shipping disruptions or weaker global electronics demand would hit a country that still releases its advance gross domestic product estimate within one month of each quarter’s end, making Thursday’s number an early read on the global tech cycle. (bok.or.kr)