Global banks lift Korea growth outlook to 3.5% on chip boom

Global investment banks revised up their forecasts for South Korea's economic growth this year and next, as a semiconductor export boom strengthens the outlook.

Eight major global investment banks projected average growth of 3.5 percent for this year at the end of September, up from 3.3 percent a month earlier, according to figures released Wednesday by the Korea Center for International Finance.

JPMorgan raised its estimate to 4 percent from 3.8 percent, the highest among the eight banks. UBS lifted its forecast to 3.5 percent from 2.8 percent, while Bank of America increased its projection to 3.6 percent from 3.1 percent. Citi raised its estimate to 3.8 percent from 3.7 percent.

Six of the eight banks also upgraded their forecasts for 2027, pushing the average to 2.8 percent from 2.5 percent at the end of August. That brought their outlook closer to the Bank of Korea's projection of 2.9 percent.

The revisions extend a run of upgrades that accelerated over the summer as chip exports surged and economic growth exceeded expectations.

The banks' average forecast for this year has risen for six consecutive months, climbing from 2.4 percent in April to 3 percent in June and 3.2 percent in July. By July, six of the eight banks expected growth of at least 3 percent, double the number a month earlier.

Real gross domestic product expanded 1.8 percent in the first quarter from the previous quarter and another 0.6 percent in the second. The second-quarter gain exceeded the central bank's May projection of 0.2 percent, strengthening the case for higher annual forecasts.

Exports reached a monthly record of $120.94 billion in September, up 83.5 percent from a year earlier. Semiconductor shipments topped $60 billion for the first time, accounting for roughly half the total, while the trade surplus hit a record $49.85 billion.

The upgrades put the banks' average above the Bank of Korea's forecast of 3.3 percent, raised in August. The central bank also lifted its projection for next year to 2.9 percent from 2.1 percent.

Other international institutions have also raised their forecasts. The Asian Development Bank lifted its projection for this year to 3.2 percent in September, up 0.6 percentage point from July. The Organization for Economic Cooperation and Development raised its estimate to 3.7 percent, up 1.1 percentage points from June, the largest upward revision among G20 economies.