IMF raises S. Korea's growth forecast to 3.3 pct amid chip supercycle

The International Monetary Fund (IMF) has upgraded its growth forecast for South Korea to 3.3 percent for 2026, driven by robust semiconductor exports that have offset the impact of the Middle East conflict. The Washington-based institution increased its projection by 0.7 percentage points from the July estimate. This forecast surpasses the global growth outlook of 3.1 percent.

The revised figure marks a 0.3 percentage point improvement from the previous 2027 forecast. The IMF highlighted South Korea and Taiwan as vital trading partners in the artificial intelligence (AI) hardware sector, suggesting that developments in these economies could ripple through raw material producers and manufacturing centers.

While global risks persist, such as Middle East tensions, trade fragmentation, and commodity price volatility, the IMF sees potential for upward momentum from a prolonged AI technology boom and the reshaping of energy supply chains. South Korea's Ministry of Finance and Economy attributes the higher forecast to the country's thriving AI hardware and chip exports, noting the 0.7 percentage point revision is greater than the 0.4 percentage point increase for a group of 41 advanced economies, with a 2026 growth projection of 2.1 percent.

The government aims to alleviate economic disparities and enhance citizens' well-being to bolster growth prospects. Recently, the ASEAN+3 Macroeconomic Research Office (AMRO) forecasted South Korea's economy to grow 3.3 percent this year, upping its earlier estimate from 3.1 percent. The Organization for Economic Cooperation and Development (OECD) also raised its 2026 growth outlook for South Korea to 3.7 percent from 2.6 percent in September, citing the nation's strong exports.

In September, South Korean exports surged 83.5 percent year-over-year to a record $120.9 billion, propelled by a spike in chip shipments.