Containers are being unloaded at Busan Port, July 1. YonhapThe South Korean economy grew at the fastest pace in more than five years in the first quarter, supported by strong exports and solid domestic demand, central bank data showed Thursday.The real gross domestic product (GDP) rose 1.8 percent in the January-March period from the previous quarter, 0.1 percentage point higher than the earlier estimate, according to preliminary data from the Bank of Korea (BOK).The reading marked the strongest quarterly growth since the third quarter of 2020, when the economy expanded 2.3 percent.On a yearly basis, the economy expanded 3.8 percent in the first quarter, a sharp pickup from the 1.6 percent growth recorded in the fourth quarter of last year. The on-year growth was the highest since the fourth quarter of 2021, when the economy grew 4.5 percent from a year earlier.The BOK said the 0.1 percentage-point upward revision to first-quarter GDP came as updated statistics related to facility investment and private consumption were reflected in the latest figures.Asia's fourth-largest economy contracted 0.1 percent on-quarter in the fourth quarter of 2025 due to sluggish manufacturing.However, rising global demand for artificial intelligence (AI) infrastructure boosted demand for semiconductors, pushing up the country's exports by 5.9 percent -- the highest increase since the third quarter of 2020 -- and facility investment by 6.6 percent, marking the strongest growth in four years.Supported by government stimulus measures and robust export performance, particularly in the semiconductor sector, the South Korean economy is expected to gain further momentum in 2026.The central bank earlier revised up its 2026 growth estimate to 2.6 percent, citing solid exports driven by a semiconductor super cycle.Other local and international institutions lifted South Korea's growth forecasts as the International Monetary Fund (IMF) projected growth of 1.9 percent this year, while the Asian Development Bank (ADB) also forecast 1.9 percent growth. The Korea Development Institute (KDI) earlier improved its growth forecast to 2.5 percent for 2026 from 1.9 percent.Based on solid economic growth, the BOK has shown signs of a possible rate hike in the near future. The central bank's upcoming rate-setting meeting is slated for July.