BOK lifts S. Korea’s growth forecast to 2.6 pct for this year amid robust chip-driven exports
The central bank on Thursday raised its economic growth forecast for South Korea to 2.6 percent for 2026 amid solid semiconductor exports. This file photo shows containers stacked at a port in Pyeongtaek on May 8. Photo by Yonhap
The central bank on Thursday raised its economic growth forecast for South Korea to 2.6 percent for 2026 amid solid exports driven by a semiconductor super cycle.
The revision by the Bank of Korea (BOK) represents a 0.6 percentage-point increase from its previous forecast of 2 percent issued in February.
It is the largest upside revision since May 2021, when the BOK raised its growth projection by 1 percentage point from 3 percent to 4 percent.
For 2027, the central bank estimated its growth outlook at 2.1 percent.
The South Korean economy grew 1.7 percent in the first quarter, marking the sharpest quarterly growth in 5 1/2 years.
The revised outlook broadly aligned with forecasts from other institutions.
The International Monetary Fund (IMF) projected growth of 1.9 percent this year, while the Asian Development Bank (ADB) projected 1.9 percent growth.
The Korea Development Institute (KDI) earlier improved its growth forecast to 2.5 percent for 2026 from 1.9 percent.
The BOK also revised up its inflation prediction to 2.7 percent from 2.2 percent, citing higher international oil prices in the aftermath of the U.S.-Iran war.
For 2027, consumer prices are estimated to rise 2.3 percent, according to the BOK.
“The Korean economy is projected to expand by 2.6 percent this year, well above the February forecast of 2 percent, driven by robust semiconductor exports, while government measures, including the supplementary budget, partially offset the Middle East-driven supply shock,” the BOK said in a release.
BOK Gov. Shin Hyun-song said in a press conference that strong exports will likely contribute 0.7 percentage point to the country’s growth this year, alongside the 0.2 percentage point gains generated by the government’s fiscal support and the 0.1 percentage-point increase brought on by the local stock market rally. On the other hand, the ongoing U.S.-Iran war will drag down the economy by 0.4 percentage point, he added.
“Based on our analysis, we concluded that if the situation in the Middle East is resolved early, this year’s growth rate could exceed 2.6 percent,” he said. “We do not think the growth is a short-lived trend.”
The central bank presented an optimistic scenario in which semiconductor-driven exports gain further momentum, raising its growth forecast by 0.5 percentage point for 2026 and 0.3 percentage point for 2027.
Under a pessimistic scenario, however, a possible slowdown in artificial intelligence investments would lower economic growth by 0.3 percentage point this year and 0.2 percentage point next year, the central bank said.
In line with the upbeat outlook, the BOK kept the key interest rate unchanged at 2.5 percent but signaled a possible rate hike in the second half.
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