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2026-07-14 10:50:12
[South Korea significantly raises its 2026 economic growth and inflation forecasts, with semiconductor exports becoming the main engine] (1) In its semi-annual outlook, South Korea's Ministry of Strategy and Finance raised its 2026 GDP growth forecast from 2.0% to 3.0% (compared to 1.1% in 2025) and its annual average inflation forecast from 2.1% to 2.6%. The main reason for the upward revision is the continued boom in semiconductor exports and the boost to the economy from government fiscal stimulus (including supplementary budgets to deal with the Middle East conflict). (2) The government plans to increase chip production capacity, expand AI data centers and cultivate the physical AI industry to consolidate its technological leadership. However, the market is focused on the central bank meeting on Thursday. Most analysts expect the central bank to start a gradual interest rate hike cycle due to inflation still being far above the 2% target, the weakness of the Korean won and the recovery of household debt and housing prices. (3) Looking ahead to 2027, growth and inflation are expected to slow to 2.2%. Exports will remain the main driver, with the current account surplus expected to reach a record $290 billion this year (compared to the previous forecast of $135 billion), thanks to strong semiconductor demand.
