South Korea’s third-quarter GDP grew at the fastest pace in more than a year

South Korea’s economy expanded at its fastest pace in more than a year, with third-quarter gross domestic product growth beating analysts’ forecasts on Tuesday.

According to preliminary estimates by the Bank of Korea, GDP rose 1.7 percent year-on-year, compared with a 1.5 percent increase expected by economists polled by Reuters. The economy grew by 0.6% in the second quarter.

Data from Bank of Korea revealed that growth was supported mostly by exports and the manufacturing sector, which expanded by 6% and 3.3% year-on-year respectively.

The construction sector was the biggest drag on the economy, contracting 8.1 percent in the reported quarter from a year earlier.

Growth in exports of goods and services, which came on the back of increased shipments of semiconductors and automobiles, was the fastest since the third quarter of 2024.

On a quarterly basis, the country’s GDP increased by 1.2%, which also beat Reuters forecasts for growth of 0.9%.

South Korea’s GDP data comes as the country’s negotiators continue to wrangle over the details of a trade deal with the Trump administration. In an interview with Bloomberg last Friday, South Korean President Lee Jae-myung said the two countries are deadlocked on key details surrounding Seoul A $350 billion investment pledge.

“The US will, of course, try to maximize its interests, but it should not be to the extent that it leads to catastrophic consequences for South Korea,” Lee said in the interview.

In July, South Korea reached a trade deal with Trump that includes overall tariffs on the country’s exports to the US of 15 percent — down from the 25 percent Trump had previously announced. In return, Seoul promised to invest $350 billion in the US

Lee is due to meet Trump on the sidelines of the Asia-Pacific Economic Cooperation summit being held in Gyeongju, South Korea, later this week.

The Bank of Korea said in a statement last Thursday that the economy continues to improve, supported by a sustained recovery in consumption and favorable export growth.

“Going forward, domestic demand is expected to continue to recover, led by consumption, and exports are likely to remain favorable for some time due to a strong semiconductor sector, but the impact of US tariffs on exports is likely to widen gradually,” BOK has been added.

The central bank forecasts full-year growth for 2025 of 0.9% and 1.6% for 2026.