South Korea’s headline numbers look strong. First-quarter gross domestic product grew a surprise 1.7%, the highest in five years, and the Kospi surged past 6,500. But the gains are heavily concentrated in one industry, leaving the broader economy uneven and vulnerable.
Semiconductor giants posted outsized results. SK hynix reported first-quarter revenue of 52 trillion won and operating profit of 37.6 trillion won, both records. Its operating margin of 72% is far above typical manufacturing levels. Samsung Electronics is estimated to have posted first-quarter operating profit of 57.2 trillion won, already exceeding its total profit for all of last year. Together, the two companies are taking about 67% of total first-quarter earnings among listed firms, underscoring a deepening concentration.
Outside chips, key engines are sputtering. Major manufacturing sectors such as autos and batteries have lost momentum. Stripping out the semiconductor boost, the figures show weak service-sector growth (0.4%) and modest private consumption (0.5%). The gap between hot macro indicators and strained household conditions suggests the economy is being misread by top-line peaks.
The Bank of Korea’s April consumer sentiment index fell 7.8 points from the previous month to 99.2, dropping below the 100 baseline for the first time in a year. The decline was the steepest since the shock during the political turmoil following the December 2024 declaration of martial law. Even as chip exports hit record highs and stocks climbed, public sentiment sank sharply.
Details point to broader stress. Indexes tied to household finances fell, including current living conditions (91) and the outlook for living conditions (92). The index for current economic conditions dropped 18 points to 68. The article also cited a Middle East-driven energy shock as an external risk that could add to supply-side inflation pressure and further erode real purchasing power.
Financial risks are also building. Credit-financed stock buying has reached a record, and even high-credit borrowers are turning to high-interest card loans, the article said. If asset prices fall after being pushed up by leverage, the impact could spread through household debt.
The government, the article argued, should look beyond record export and profit figures and focus policy on rebuilding domestic demand and diversifying the industrial base, warning that a downturn in the semiconductor cycle could shake the economy’s main pillar.
* This article has been translated by AI.
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