Asian Development Bank raises South Korea's 2026 growth forecast to 3.2% amid AI-driven export boom

The Asian Development Bank on Wednesday raised its 2026 economic growth forecast for South Korea to 3.2 percent from the 2.6 percent projected in July, citing strong exports and corporate earnings amid the artificial intelligence (AI) boom.

The ADB's latest estimate marks a 0.6 percentage-point increase from the previous report, with the bank also raising its 2027 growth outlook for Asia's fourth-largest economy by 0.3 percentage point to 2.3 percent.

The Manila-based bank had projected growth of 1.9 percent and 2.6 percent for 2026 in its April and July reports, respectively, for Asia's No. 4 economy.

The ADB said the revised forecast reflected South Korea's growing exports amid soaring global demand for AI chips.

South Korea's expansionary fiscal policy and robust corporate earnings are contributing to a gradual recovery in private consumption, it added.

The ADB, however, noted potential risks include rising geopolitical tensions, increased volatility in global financial markets and additional U.S. tariff hikes, which could weigh on exports and investment.

As for inflation, the ADB maintained its July forecast for South Korea, predicting consumer prices will likely rise 2.7 percent on-year in 2026.

The ADB said the government's efforts to curb consumer price increases were expected to partially offset inflationary pressures from higher global energy prices and stronger domestic demand.

The development bank maintained its inflation forecast for 2027 at 2.2 percent as well.

In July, the Ministry of Finance and Economy revised up the country's economic growth projection for 2026 to 3 percent in its second-half policy report, up 1 percentage point from its previous outlook, citing the semiconductor supercycle.

In August, the state-run Korea Development Institute (KDI) also said South Korea's economy is expected to grow 3.2 percent in 2026, revising up its previous forecast of 2.5 percent. (Yonhap)