IMF Raises South Korea's 2026 Growth Forecast to 3.3%, Up 0.7 Percentage Points... "Semiconductors Offset War Impact"

The International Monetary Fund (IMF) has raised South Korea's economic growth forecast for this year by 0.7 percentage points in three months.

This is interpreted as an outlook that growth will rise, driven by a boom in semiconductor exports despite the negative impacts of the Middle East war.

The Ministry of Economy and Finance announced that the IMF projected South Korea's real gross domestic product (GDP) growth rate for this year at 3.3% in its October World Economic Outlook released today (13th).

In its report, the IMF explained the background for upgrading South Korea's growth forecast, stating, "Strong external demand for semiconductors will offset the negative impacts of the war and support South Korea's growth momentum."

The IMF releases economic outlooks for all member countries every April and October, and updated forecasts for 30 major economies in January and July.

The IMF's growth forecast for South Korea announced last July was 2.6%.

This upward revision margin exceeds both the global average (+0.1 percentage points) and the advanced economies' average (+0.4 percentage points).

The Ministry of Economy and Finance conveyed, "This is evaluated to be the effect of South Korea's strong export performance related to artificial intelligence (AI) hardware and semiconductors."

In its report, the IMF also singled out South Korea and Taiwan as key trading nations for AI-related computer hardware.

The analysis shows that the two economies account for 62% of net trade in AI-related computer hardware.

Considering this supply chain structure, the IMF diagnosed that spillover effects could also appear in raw material exporting countries and manufacturing hub nations in East Asia.

Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il stated on X (formerly Twitter), "If South Korea achieves 3.3% growth as projected by the IMF, it will surpass the global economic growth rate (projected at 3.1%). Excluding 2020 when the COVID-19 pandemic broke out, this would be a meaningful achievement for the first time in 16 years since 2010."

The IMF's newly released growth forecast for this year is higher than those of the government (3.0%), the Bank of Korea (3.3%), the Korea Development Institute (KDI, 3.2%), and the Asian Development Bank (ADB, 3.2%), while lower than those of the Organisation for Economic Co-operation and Development (OECD, 3.7%) and Moody's (3.5%).

The IMF also raised its growth forecast for South Korea next year by 0.3 percentage points, from 2.5% to 2.8%.

This is higher than the projections by the government and KDI (2.2% each), the ADB (2.3%), and the OECD (2.6%), but lower than that of the Bank of Korea (2.9%).

Meanwhile, the IMF revised up its global economic growth forecast for this year by 0.1 percentage points from 3.0% to 3.1%, while maintaining next year's forecast at 3.4%, the same as in July.

The IMF diagnosed that growth paths by country will diverge depending on their exposure to the Middle East war and the degree of participation in the AI technology value chain.

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.