South Korea's real GDP jumped 1.7 percent in Q1 2026 from the prior quarter—the strongest growth in 5½ years—despite Middle East tensions, easily topping the Bank of Korea's 0.9 percent forecast on robust exports and steady domestic demand. Part of the rebound following 2025's modest 1% annual expansion (see prior article in series).
The Bank of Korea's preliminary data released Thursday showed real GDP rose 1.7 percent in January-March 2026 from Q4 2025, the best quarterly result since 2.2 percent in Q3 2020 and almost double the BOK's projection.
Exports soared 5.1 percent, the quickest since Q3 2020, fueled by semiconductor demand. Private consumption increased 0.5 percent, government spending 0.1 percent, facility investment 4.8 percent, and construction investment 2.8 percent.
Year-on-year, GDP grew 3.6 percent, up sharply from Q4 2025's 1.6 percent. Real gross domestic income climbed 7.5 percent quarter-on-quarter, the highest since Q1 1988's 8 percent.
The BOK had forecast 2 percent growth for 2026 in February, but last week cautioned that Middle East conflicts could drag this year's performance below expectations.
