Strong chip exports expected to spill over into private consumption from next year: BOK report

By Kim Boram

SEOUL, Oct. 22 (Yonhap) -- South Korea's semiconductor export boom, driven by global demand for artificial intelligence (AI) infrastructure, is expected to give private consumption a more meaningful boost starting next year, a central bank report showed Thursday.

"Recently, the Korean economy has seen a significant acceleration in growth, driven by the strong semiconductor market, but the pace of growth in private consumption remains relatively modest," a report published by the Bank of Korea (BOK) said.

Asia's fourth-largest economy grew 3.8 percent in the first half from a year earlier, while private consumption expanded 2.6 percent over the same period.

The economic growth was supported by robust exports, led by strong semiconductor shipments.

In September alone, exports soared 83.5 percent on-year to a record US$120.9 billion, while semiconductor exports surged 263 percent to an all-time high of $60.3 billion.

The BOK report said private consumption has continued to recover since hitting a low in the first quarter of 2025, with the strength and sustainability of the recovery depending on how broadly the benefits of the semiconductor boom spread to households.

It identified four factors that could help the semiconductor boom translate into stronger private consumption: performance bonuses paid by major companies, dividend payments to shareholders, expanded government transfer payments to households and improvements in households' real purchasing power as the Korean won strengthens.

Chipmakers Samsung Electronics Co. and SK hynix Inc. have announced plans to provide additional bonuses linked to their record high operating profits and pay dividends to shareholders.

Higher corporate tax revenues could also give the government more room to increase spending on lower-income households, while a stronger Korean won could lower the prices of imported goods, improving households' purchasing power.

The BOK report said the recovery in private consumption "is expected to gradually expand as the positive effects of the semiconductor boom ripple through the economy into next year."

On the other hand, the latest findings said there were issues facing the country that could offset growth.

"Factors such as mounting household debt, delays in the recovery of the housing construction sector and stock market corrections could act as constraints on the pace of recovery," it added.

brk@yna.co.kr
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