KDI raises Korea's 2026 growth outlook to 3.2% amid AI boom

Korea's economy is anticipated to expand by 3.2 percent in 2026, according to the Korea Development Institute (KDI), a state-run think tank. This upward revision from their previous forecast of 2.5 percent is attributed to robust global demand, primarily fueled by the artificial intelligence (AI) boom. The KDI attributes this positive outlook to the unexpected strength of global demand for semiconductor products, which has resulted in increased exports and facility investments.

These factors, in turn, are projected to stimulate private consumption in 2027, leading to an expected economic growth rate of 2.2 percent for that year, up 0.5 percentage points from their initial estimate.

Furthermore, the KDI projects that Korea's export volumes will increase by 8.7 percent in 2026 and 5 percent in 2027. Despite potential challenges such as U.S. tariff measures and geopolitical uncertainties in the Middle East, the impact is expected to be mitigated by global AI-related investments. The KDI also highlights that Korea is currently experiencing a surge in exports and facility investment, driven by the ongoing AI boom.