Chip boom lifts South Korea to fastest growth in over 5 years

South Korea’s economy recorded its fastest growth in more than five years in the first quarter, driven by strong global demand for semiconductors. According to the Bank of Korea, the country’s GDP expanded by 1.7 percent in the January–March period compared to the previous quarter, marking the strongest performance since the third quarter of 2020.

The growth was largely fueled by a 5.1 percent rise in exports, led by IT products such as semiconductors. Economists noted that robust chip shipments played a key role in boosting overall economic activity, while easing inflation and government support helped strengthen domestic demand.

On a yearly basis, South Korea’s economy grew 3.6 percent, improving from 1.6 percent growth in the previous quarter. However, government spending saw only a modest increase of 0.1 percent.

Despite the strong performance, analysts caution that growth may slow in the coming months due to external risks. Ongoing tensions linked to the Iran conflict and disruptions in energy supplies—especially through the Strait of Hormuz—could impact key industries such as petrochemicals and manufacturing in the export-dependent economy.