BOK Sees Chip Export Boom Lifting Private Consumption; Lee Urges Balanced Growth

Asia's fourth-largest economy grew 3.8 percent in the first half from a year earlier, while private consumption expanded 2.6 percent, the BOK report said. It said consumption has continued to recover since hitting a low in the first quarter of 2025, but the pace remains modest compared with export-led growth. In September, exports rose 83.5 percent on-year to a record $120.9 billion, and semiconductor exports surged 263 percent to an all-time high of $60.3 billion.

The BOK 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 gains in households' real purchasing power as the won strengthens. Samsung Electronics and SK hynix have announced plans to provide additional bonuses linked to record operating profits and to pay dividends to shareholders, the report said. Higher corporate tax revenue could give the government more room to increase spending on lower-income households, while a stronger won could lower import prices and improve purchasing power.

The BOK 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.' It also cited mounting household debt, delays in the recovery of the housing construction sector and stock market corrections as factors that could constrain the pace of recovery.

At a meeting with senior aides, President Lee Jae Myung said Thursday that a recent rebound in the country's potential growth rate signals stronger economic fundamentals and should help promote balanced growth of large and small firms. He cited an International Monetary Fund report projecting the potential growth rate at 2.14 percent this year and 2.2 percent in 2027, the first consecutive annual increases in about 40 years.

Lee said the trend should be used to reinforce competitiveness in artificial intelligence and other advanced industries while directing financial and policy resources to slower-recovering sectors. He called for an industrial ecosystem in which conglomerates and small and medium-sized firms grow together, saying growth concentrated only among conglomerates could worsen economic polarization and harm the economy's potential growth capacity. Smaller firms account for 80 percent of total employment, he said.