By Eun-Young Jeong

SEOUL -- South Korea's economy expanded quarter-on-quarter, as Asian economies shake off the pandemic's worst effects and return to growth.

South Korea, during the July-to-September period, reported its gross domestic product rose 1.9% from the previous quarter, aided by a strong recovery in the country's exports of cars and memory chips. Asia's fourth-largest economy, South Korea had fallen into a recession earlier this year after two straight quarters of negative growth.

South Korea's better-than-expected performance comes after China reported this month that its third-quarter GDP had expanded 4.9% from the prior year. Vietnam, which has kept cases low throughout the pandemic and never reported an economic dip, experienced 2.6% growth over last year's third-quarter. Taiwan, another Covid-19 success, is expected to post year-over-year GDP expansion of 2.2% later this week after declines the previous quarter.

The strong economic numbers underpin how swaths of Asia have allowed citizens to regain some normalcy during the pandemic, dining at restaurants, watching musicals and marching into the office -- albeit with a face mask. It contrasts with intensifying restrictions applied across Europe and record-level daily cases in the U.S., where businesses wonder how lockdowns and pandemic paranoia may dull commerce.

South Korea, which dealt with a resurgence of Covid-19 cases during its third quarter, had slumped into its first recession on an annual basis in more than 10 years. On a quarterly basis, a more widely used measure in South Korea, it was the first recession in 17 years. The economy grew quarter-on-quarter. But on a yearly basis, the country's GDP contracted at 1.3% -- though it handily topped a median forecast of a 2% decline, according to seven economists polled by The Wall Street Journal. South Korea's quarter-to-quarter results also bested consensus expectations by two-tenths of a percentage point.

The country's rebound has been backed by resilient global trade. In the third quarter, South Korea's net exports jumped 15.6% from the previous quarter and contributed 0.4% percentage point to its overall GDP. In September, South Korea recorded a yearly growth in exports for the first time since February as shipments to the U.S. and Europe rose.

Export demand has continued to improve this month, rising 5.9% for the first 20 days of October from the previous year after adjusting for the number of working days. Exports in the third quarter showed their biggest rise in decades.

At a Tuesday policy meeting, Finance Minister Hong Nam-ki said South Korea's economy had "entered a recovery path for normalization." Mr. Hong added he expects the economy to expand in the fourth quarter, too.

Remote working and schooling have also driven up demand for electronic gadgets and data servers that comprise the internet's plumbing, a win for South Korea's chip makers like Samsung Electronics Co. and SK Hynix Inc.

"Korea has benefited a lot from the global demand for electronics," said Alex Holmes, a Singapore-based economist at Capital Economics, adding slumps in petrochemicals and oil refining have been drags on exports.

South Korea's economy is expected to decline by around 1% this year, the best-performing major country apart from China, according to the Organization for Economic Cooperation and Development's latest forecasts. By contrast, the U.S., Germany and Japan are forecast to contract by 3.8%, 5.4% and 5.8%, respectively, the OECD forecasts.

China's economy, which grew for the second straight quarter, has helped lift some neighboring countries and major trade partners.

Japan, which has yet to report third-quarter figures, has seen its economy rebound more quickly than expected thanks to strong demand for cars and high-tech goods such as semiconductor-manufacturing machines, with exports to China rising 14% in September from the prior year. On a quarter-to-quarter basis, Singapore's economy grew by nearly 8% for the third quarter, though it declined 7% year-over-year.

South Korea's economic growth came as it dealt with a second wave of virus cases that began in early August. During that month, the country reported more cases in three weeks than it had in the prior three months combined. But the raw numbers were a fraction of larger outbreaks elsewhere: cases peaked at 441 on Aug. 27.

One positive surprise, economists say, is the relatively modest fall in private consumption, which dropped 0.1% from the previous quarter, or by 4.5% when compared with the previous year.

Some economists had expected South Korea to be hit harder, as the country kept elevated social distancing measures in place nationally for much of August and September. Those restrictions limited gatherings to 50 indoors and closed venues like museums. But restaurants, bars and other stores largely stayed open, although at reduced operation hours.

South Korea's fast response dealing with its second wave helped small-business owners like Bae Jin-sung get back on their feet. His "Cuisine La Clé" restaurant in Seoul, which opened last year, had seen sales nosedive as tourism all but disappeared and locals stayed indoors. One day, he recalled, the restaurant had sales of just 60,000 South Korean won, or $53.

But on a recent evening, days after South Korea relaxed social distancing to its lowest levels, Mr. Bae had to turn away diners who had shown up without reservations. "I'm so thankful," he said.

Park Jeong-woo, a Seoul-based economist at Nomura, says South Korea's export-led growth doesn't have the same pull on the domestic economy as it used to have. The gains in exports aren't leading to investments in South Korea because of automation and offshore production, Mr. Park said. "That's going to lead to reduced jobs and ultimately, less consumption," he said.

For now, Lim Byoung-jin's "Bar Cham" is back to being busy. It was packed on a recent weekend, even asking latecomers to get on a waiting list.

When the government rolled out its strictest measures for the Seoul area in August, the bar for two weeks opened during the afternoon and closed at 9 p.m. -- a divergence from its usual operations of 7 p.m. to 3 a.m. The bar's frequent customers still showed up, but Mr. Lim, the owner, said he had to go into debt to handle the costs.

"We managed to survive," he said. "I hope this can continue, but you never know when things will quickly change again."

Kwanwoo Jun in Singapore and Peter Landers in Tokyo contributed to this article.

Write to Eun-Young Jeong at Eun-Young.Jeong@wsj.com

Corrections & Amplifications

This article was corrected at 1:33 p.m. ET to reflect that South Korea had its first recession in more than 10 years on an annual basis; on a quarterly basis, which is more widely used in South Korea, it is the first recession in 17 years. The original version of this article, which said it was the first in more than 15 years, was also correct.

(END) Dow Jones Newswires

10-27-20 0831ET