South Korea Raises Growth Forecast on Chip Boom

South Korea’s government on Tuesday increased its 2026 economic growth forecast to 3 percent, anticipating a surge in semiconductor exports will drive expansion. The country expects nominal gross domestic product to grow 12.3 percent this year, the fastest pace in three decades, with exports projected to increase by 40 percent. A current account surplus of $290 billion is also forecast, fueled by strong semiconductor shipments.

Policymakers acknowledge that this recovery is uneven, with employment gains expected to be modest and inflation rising to 2.6 percent. They are focused on sustaining growth beyond the current chip cycle through substantial investment in semiconductors, artificial intelligence, and related infrastructure.

The government plans 800 trillion won ($536.4 billion) in semiconductor investment over five years and aims to raise Korea’s potential growth rate to 3 percent. They also intend to attract 2,000 skilled foreign professionals by 2030 and establish a new Future Response Fund to invest in long-term growth areas.