Seoul [South Korea], April 23 (ANI): South Korea recorded its most significant economic expansion in more than five years during the first quarter, fueled by a global surge in demand for semiconductors and artificial intelligence technology.

According to a report by The Korea Herald, data from the Bank of Korea released on Thursday indicated that the nation's gross domestic product grew by 1.7 per cent. This rate marked the fastest pace of growth since the third quarter of 2020, when the economy rebounded following the easing of pandemic restrictions. On a year-on-year basis, the economy expanded by 3.6 per cent.

The report noted that in February, the Bank of Korea projected a growth rate of 0.9 per cent. The actual results nearly doubled that forecast, highlighting a sharp recovery.

Exports acted as the primary engine for this growth, rising 5.1 per cent on the back of high demand for IT products and memory chips. Facility investment also saw a significant boost, climbing 4.8 per cent as companies invested heavily in semiconductor manufacturing equipment.

'The stronger-than-expected semiconductor cycle was the main reason for the upside surprise in the outlook,' the report quoted Lee Dong-won, a senior official of economic statistics at the BOK, at a press briefing held on the day.

The country's two chip heavyweights, Samsung Electronics and SK hynix, both reported record-high earnings during the first quarter. Samsung Electronics posted revenue of 133 trillion won (USD 90.6 billion) and an operating profit of 57.2 trillion won (USD 39 billion).

Similarly, SK hynix saw its operating profit surge to 37.61 trillion won (USD 25.6 billion). These figures highlighted the central role that the technology sector played in South Korea's industrial output at the start of the year.

'Semiconductor manufacturing's contribution to growth stands at around 55 per cent,' the report quoted Lee, adding that the growth rate could be more than halved when excluding it.

This robust performance followed a period of fluctuation for Asia's fourth-largest economy. South Korea saw a 0.2 per cent contraction in the first quarter of last year, followed by a slow recovery through the middle of the year and another 0.2 per cent dip in the final quarter.

The report noted that the 1.7 per cent jump in the first three months of this year suggested a definitive rebound in economic momentum. The heavy reliance on the chip sector remained evident, as it accounted for more than half of the total growth recorded in the period. (ANI)