A Ray of Hope for S. Korea's Economy? "We're on the Brink of Death"

The Korea Development Institute (KDI) has raised its economic growth forecast for South Korea this year to 3.2%.

The growth forecast for the first half of the year, announced in May, was 2.5%, marking a 0.7 percentage point upward revision in just three months.

In particular, the institute analyzed that 0.6 percentage points of this increase came from semiconductors.

[Kim Mi-ru, Head of Macroeconomic and Financial Policy Research at the Korea Development Institute (KDI): "You can see that about 0.6 percentage points (of the 0.7 percentage point upward revision) are due to increases driven by semiconductors and semiconductor spillover effects. There is the direct increase in semiconductor exports, but there is also facility investment made to produce semiconductors, and a modest upward revision in private consumption resulting from income generated thanks to semiconductors."]

Driven by factors such as rising semiconductor prices, this year's current account surplus is also estimated to reach a record high of 360 billion dollars.

However, the institute pointed out that there are limits to how much the semiconductor super-boom can translate into the actual felt economy.

First, the forecast for the increase in the number of employed persons this year was lowered by 60,000, from 170,000 to 110,000.

While semiconductors have a major impact on exports and facility investment, their share of total employment is low, resulting in relatively weak employment-inducing effects.

[Park Da-bin, Job Seeker: "I know that semiconductor companies are building factories in various places and hiring a lot of people, but for liberal arts majors, many positions are being replaced by AI these days, and they only hire when vacancies open up..."]

The critique is that because industries outside of semiconductors are sluggish, the general public cannot feel the semiconductor boom.

[Self-employed business owner: "Business is bad elsewhere, so honestly, if you look at manufactured goods (suppliers) and places like that, almost all of our company statuses are on the brink of death right now."]

KDI emphasized that heavy reliance on the semiconductor industry could become a risk that heightens the volatility of the entire economy. Therefore, it stressed that structural improvements must be made so that the competitiveness of other industries is fostered together while the semiconductor boom can trickle down to the felt economy.

In addition, the prolonged war in the Middle East, uncertainties surrounding U.S. tariff policies, and expanded financial market volatility were still cited as risk factors for the South Korean economy.

Reported by Chae Hee-sun | Produced by Lee Se-young | Camera Filming by Lee Jae-young | Video Editing by Yoon Tae-ho | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.