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

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

The Ministry of Economy and Finance stated 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 (October 13).

In the report, the IMF explained the background for upwardly revising South Korea's growth forecast, stating, "Strong external demand for semiconductors will support South Korea's growth momentum by offsetting the negative impacts of the war."

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

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

This upward adjustment 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 stated, "This is evaluated as an effect of South Korea's strong export performance related to artificial intelligence (AI) hardware and semiconductors."

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

According to its analysis, 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 exporters and manufacturing hub countries in East Asia.

The IMF's newly released growth forecast for this year is higher than those of the South Korean government (3.0%), the Bank of Korea (3.3%), the Korea Development Institute (KDI, 3.2%), and the Asian Development Bank (ADB, 3.2%), but 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 forecasts by the government and KDI (both 2.2%), the ADB (2.3%), and the OECD (2.6%), but lower than the Bank of Korea's forecast (2.9%).

Meanwhile, the IMF upwardly adjusted this year's global economic growth forecast 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 conflict and their degree of participation in the AI technology value chain.