South Korea's Q4 growth buoyed by chip exports but threatened by weak demand and oil prices

Analysts expect South Korea to sustain robust fourth-quarter growth, driven primarily by a sharp rebound in semiconductor exports that pushed August trade to a historic $98.25 billion. The OECD upgraded its 2026 growth projection to 3.7%, while the Asian Development Bank raised its estimate to 3.2%, both highlighting strong industrial output and AI-related demand. Despite the export boom, domestic consumption remains sluggish, hindered by elevated interest rates, a depreciating won and oil prices that have hovered above $100 per barrel.

The OECD also increased its inflation forecast to 3.0% for the year, reflecting higher energy costs. Researchers such as Ha Geon-hyung note that tighter financial conditions are likely to weigh more on consumer spending than on investment, leaving the spread of the export-led recovery into the broader economy uncertain.