AI boom sustains S. Korea's growth despite global headwinds: IMF official

Bangkok, October 18 - Despite global economic challenges, South Korea is flourishing due to the artificial intelligence (AI) boom, according to a senior International Monetary Fund (IMF) official. Choi Ji-young, the IMF's executive director for Asia and the Pacific, discussed this during a recent interview in Bangkok, highlighting the Middle East crisis and the Russia-Ukraine conflict as ongoing uncertainties.

The country's growth prospects have been upgraded, with the IMF now projecting a 3.3% growth rate for 2026, a 0.7 percentage point increase from their July forecast, largely driven by robust semiconductor exports fueled by high demand for AI infrastructure. This surge in AI-related investment is expected to persist, given the lengthy process of constructing AI data centers, which can take about ten years to complete.

While the IMF recognizes potential risks such as a stock market correction or a shift in the current account balance, they remain optimistic about the long-term benefits of AI investment. Choi emphasized that South Korea's unique circumstances, including its growth potential and fiscal flexibility, set it apart from other nations.

The IMF encourages countries in similar situations not to fixate on debt-to-GDP ratios but to prioritize innovation and growth investments. The IMF remains supportive of the Future Fund, a planned government initiative to leverage windfall revenue from the chip industry for long-term growth, though they await a more comprehensive evaluation of the scheme.