ADB raises S. Korea's 2026 growth forecast to 3.2 pct

The Asian Development Bank (ADB) has upgraded its growth forecast for South Korea's economy in 2026 to 3.2 percent, up from the 2.6 percent projected in July. The increase is attributed to robust exports, corporate earnings, and the ongoing artificial intelligence (AI) boom. This represents a 0.6 percentage-point rise from the previous estimate and marks a significant improvement from the April forecast of 1.9 percent.

The ADB's revised projection also sees South Korea's growth for 2027 at 2.3 percent, up 0.3 percentage points from its July estimate of 2.6 percent. The bank attributes the growth boost to South Korea's expanding exports driven by the soaring demand for AI chips, as well as the country's expansionary fiscal policy and strong corporate earnings, which are contributing to a recovery in private consumption.

However, the ADB has warned of potential risks, including geopolitical tensions, heightened volatility in global financial markets, and additional U.S. tariff hikes, which could negatively impact exports and investments. Regarding inflation, the ADB maintains its July forecast, predicting South Korean consumer prices to rise by 2.7 percent on-year in 2026.

The bank believes the government's efforts to curb price increases will partially offset inflationary pressures stemming from higher global energy costs and robust domestic demand. The ADB also reaffirms its 2027 inflation forecast at 2.2 percent. Notably, the Ministry of Finance and Economy revised South Korea's 2026 growth projection up to 3 percent in its second-half policy report in July, compared to the previous 3 percent outlook.

In August, the Korea Development Institute (KDI) also raised its 2026 growth forecast to 3.2 percent, up from the earlier 2.5 percent prediction.