South Korea’s economy is widely expected to have returned to growth in the first quarter, propelled by a dramatic rise in semiconductor exports alongside continued domestic demand, according to a Reuters poll of economists.
The median forecast from 18 economists projected a seasonally adjusted expansion of 1.0% for January-March, rebounding from a contraction in the final quarter of 2025. Individual forecasts in the poll ranged from 0.2% to 1.3%.
On an annual basis, gross domestic product was forecast to have increased 2.7% in Q1, accelerating from 1.6% in the previous quarter, based on the median estimate from a wider group of 22 economists polled between April 15 and April 20.
Analysts point to exports, and particularly semiconductors, as the primary growth engine. Official trade data showed exports were modestly higher in January and February before jumping sharply in March. Semiconductor shipments surged 151.4% to a record $32.83 billion in that month, accounting for nearly 40% of total monthly exports as memory chip prices and strong server demand tied to AI investment boosted sales.
"If you look at the exports data, semiconductors have been the growth engine and are expected to remain so for the rest of the year. At the same time private consumption, investment data and some of the monthly indicators point to a strong performance in Q1," said Jeeho Yoon, senior economist at BNP Paribas.
Private consumption and investment, along with several monthly indicators, were cited by some economists as supporting a solid first-quarter performance.
However, forecasters also flagged geopolitical risks. Several economists warned that the U.S.-Israeli war with Iran, which has disrupted oil and gas supplies from the Middle East, could begin to weigh on activity. South Korea sources roughly 70% of its oil from the Gulf, leaving the economy vulnerable to higher energy costs.
"The conflict will probably have more of an impact on Q2 rather than Q1. We’re in for a higher energy-price environment for the rest of the year," BNP’s Yoon said, adding that while this could weigh on growth and push up inflation in the near term, fiscal policy is helping cushion the immediate shock.
Despite the geopolitical uncertainty, economists in a separate Reuters poll earlier this month expected GDP growth to average 2.0% for the year, a forecast unchanged from pre-war expectations and slightly above the International Monetary Fund’s 1.9% projection. Inflation was forecast to average 2.4% in 2026, up from 1.9% in a January survey.
Contextual note - The polling data reflects economist expectations as of mid-April and the official trade figures referenced cover the three-month period ending in March. Forecast ranges and median estimates reflect the aggregated views of the cited economist panels.