SEOUL: South Korea raises its 2026 economic growth forecast from 2% to 3% and unveils plans to turn the current semiconductor boom into a lasting increase in the country’s growth potential.
The government expects nominal gross domestic product to expand 12.3% this year – the fastest pace in three decades.
Exports are projected to surge 40%, while the current account surplus is forecast to more than double to a record US$290bil, driven by soaring semiconductor shipments.
“We cannot afford to be complacent about the current upswing,” Deputy Prime Minister and Finance Minister Koo Yun-cheol said at a joint government briefing in Seoul on Tuesday.
“Whether this boom proves temporary or marks the start of a new growth path for the South Korean economy will depend on the choices we make and the actions we take now.”
The government raised its forecast for facility investment growth to 5% from just over 2% in January.
Despite the stronger outlook, policymakers acknowledged that the recovery remains uneven.
Employment is expected to increase by 150,000 this year, slightly below the previous forecast of 160,000, as much of the growth is concentrated in capital-intensive semiconductor manufacturing. Inflation is projected at 2.6%, up from 2.1%.
The government also expects the boom to moderate. Growth is forecast to slow to 2.2% in 2027, with export growth easing sharply to 1% as exceptionally strong semiconductor prices and shipments normalise.
The challenge, officials said, is to ensure the current chip upcycle leaves a lasting legacy rather than becoming another temporary export-driven rebound.
To achieve that goal, the government unveiled what it called a “3-4-5 Vision” – raising South Korea’s potential growth rate to 3%, making the country one of the world’s four largest exporters and lifting per capita gross national income to US$50,000.
Officials did not set a timetable for achieving a 3% potential growth rate, but said the export and income targets remain attainable by 2030 if current trends continue. At the centre of the strategy are three large investment projects spanning semiconductors, artificial intelligence (AI) infrastructure and industrial AI applications.
The semiconductor plan calls for doubling South Korea’s chip production capacity within five years through 800 trillion won of investment in four fabrication plants in the southwest and 156 trillion won for a high-bandwidth memory and advanced packaging cluster in the Chungcheong region. The government also aims to build 8.4 gigawatts of AI data centre capacity backed by 550 trillion won in investment while securing about 50,000 graphics processing units.
A separate physical AI initiative will expand artificial intelligence deployment across factories, robotics, automobiles and shipbuilding.
Most of the investment will come from the private sector, with the government supporting projects through infrastructure, financing, research and development, and regulatory reforms.
Officials said the goal is to convert today’s semiconductor windfall into sustained gains in productivity and capital investment. To support the expansion, the government plans to broaden visa and residency pathways for foreign national scientists, researchers and graduates, targeting 2,000 highly skilled professionals by 2030. — The Korea Herald/ANN
