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SEOUL: South Korea's economy is experiencing robust growth driven by global investment in artificial intelligence (AI) infrastructure, according to a state-run think tank. The Korea Development Institute (KDI) reported that semiconductor production and investment are thriving, bolstered by strong external demand. The October figure for South Korean outbound shipments reached a record US$115.3 billion, a remarkable 93.7% increase, propelled by high global demand for semiconductors and sustained investment in AI-related infrastructure by major technology firms.

The surge in exports of AI data center construction materials, such as steel products, nonferrous metals, and electronic devices, reflected the positive trend. Equipment investment in machinery also increased significantly, the KDI noted. However, the think tank cautioned that economic growth is yet to permeate widely among households, with private consumption growth remaining modest.

This sluggish spread of growth can be attributed to limited income gains from the semiconductor boom and the persistent impact of high oil prices on household finances. Inflation in South Korea persisted at a high level due to volatile global oil prices, and further constrained households' spending capacity due to higher market interest rates.

The KDI also expressed concern over the potential impact of ongoing conflicts in West Asia and escalating policy uncertainties in major economies.