Asian Development Bank raises Republic of Korea's 2026 Growth Forecast to 3.2%

The Asian Development Bank (ADB) raised its growth forecast for the Republic of Korea to 3.2% in 2026, up from the 2.6% projection made in July. This increase is attributed to strong exports and corporate earnings driven by the AI boom. The ADB's latest estimate represents a 0.6% rise from its previous report and a 0.3% boost to its 2027 growth outlook for the fourth-largest Asian economy.

The Manila-based bank had previously forecasted 1.9% and 2.6% growth for 2026, respectively, in its April and July reports. The revised forecast is influenced by Republic of Korea's expanding exports due to the soaring demand for AI chips, alongside a strong fiscal policy and solid corporate earnings that are contributing to a recovery in private consumption.

However, the ADB highlighted potential risks such as geopolitical tensions, heightened volatility in global financial markets, and further US tariff hikes, which could negatively impact exports and investments. The bank has maintained its forecast for inflation, predicting a year-over-year increase of 2.7% in 2026 and 2.2% in 2027. The government's efforts to control consumer price rises are expected to partially counteract inflationary pressures caused by higher global energy costs and robust domestic demand.

In July, the Ministry of Finance and Economy revised the country's economic growth projection for 2026 upward to 3%, driven by the semiconductor supercycle. In August, the Korea Development Institute (KDI) also revised its forecast for Republic of Korea's 2026 economic growth to 3.2%, increasing from its earlier prediction of 2.5%.