IMF raises Korea’s growth forecast to 3.3% on AI-driven semiconductor boom

The International Monetary Fund has raised its growth forecast for South Korea to 3.3% this year, citing a semiconductor supercycle driven by artificial intelligence investments. This marks a significant increase of 0.7 percentage points from the previous forecast of 2.6% in July. The IMF attributes this growth to strong external demand, particularly in semiconductors, which are crucial for AI-powered computing hardware.

Together, South Korea and Taiwan account for 62% of global net exports in this sector. The fund also projects Korea's growth for the next year to be 2.8%, an increase of 0.3 percentage points from the previous 2.5% forecast. However, the IMF warns that increased AI investment in the United States may present risks for Korea's economy, citing potential volatility in technology-related equities.

While global growth is expected to follow a similar trend, the IMF notes that countries relying on energy imports may face upward pressure on prices due to ongoing Middle East conflicts. Despite this, the IMF maintains its inflation forecast for Korea at 2.7% for this year. The organization urges governments to rebuild fiscal buffers and pursue medium-term fiscal consolidation, with a focus on targeted assistance for vulnerable groups and structural reforms to enhance labor mobility and regulatory efficiency.