Containers are stacked at a port in Pyeongtaek, Gyeonggi Province, April 1. Yonhap

Despite risks stemming from the Middle East war, Korea's economy grew at its fastest pace in more than five years in the first quarter, lifted by a semiconductor export boom, central bank data showed Thursday.

According to preliminary data from the Bank of Korea (BOK), real gross domestic product (GDP) rose 1.7 percent in the January–March period from the previous quarter, nearly double the bank's forecast of 0.9 percent. It marked the strongest quarterly expansion since the third quarter of 2020 when the economy expanded 2.2 percent.

The economy shrank 0.2 percent in the first quarter of 2025, then rebounded with growth of 0.7 percent and 1.3 percent in the next two quarters, before slipping back into a 0.2 percent decline in the fourth quarter amid weak facilities investment and a slowdown in construction.

Manufacturing and exports — particularly semiconductors — accounted for the bulk of this year's first-quarter growth.

Facilities investment, including spending on chip equipment, jumped 4.8 percent, while private consumption rose 0.5 percent and government spending edged up 0.1 percent.

Exports surged 5.1 percent, led by IT products such as semiconductors, marking the fastest growth since the third quarter of 2020.

"Semiconductor manufacturing accounted for about 55 percent of total GDP growth in the first quarter. Earnings at major chipmakers far exceeded expectations, pushing overall growth well above the February forecast," said Lee Dong-won, director general of the BOK's economic statistics department, during a briefing.

"Private consumption served as a buffer, while strong semiconductor exports and investment to expand chip production capacity drove the expansion," he added.

The strong rebound in growth also points to Korea's heavy reliance on semiconductors, which are highly sensitive to global conditions. Some analysts warn that any shift in the external environment could weigh significantly on growth.

Source: Korea Times News