ع
The Bank of Korea told lawmakers in a report submitted to the National Assembly that the domestic economy is expected to see a significant increase in its growth rate this year driven by strong semiconductor exports and will maintain steady growth next year as well. According to the central bank the semiconductor sector’s continued expansion should allow improving income conditions to spread to domestic demand including consumer spending producing a favorable growth trend overall. The assessment reflects how gains in the chip industry have begun to support broader activity beyond exports alone.
Bank of Korea figures show the central bank has raised its growth forecast to 3.3 percent for 2026 and 2.9 percent for 2027 citing the semiconductor upcycle and its widening spillover into the economy. A report from the Korea Center for International Finance placed the average 2026 growth projection among eight major global investment banks at 3.5 percent as of the end of September up from 3.3 percent a month earlier. JPMorgan now leads those forecasts at 4.0 percent while UBS Bank of America and Citi have also lifted their estimates in recent months.
Gross domestic income expanded 13.2 percent in the first quarter of 2026 and 15.7 percent in the second quarter according to the Bank of Korea compared with 3.5 percent in the fourth quarter of 2025. These income gains have coincided with record export performance that saw September shipments reach $120.94 billion up 83.5 percent from a year earlier with semiconductors accounting for roughly half the total. The central bank noted that such strength has begun to translate into higher household incomes and consumption.
In response to these robust conditions the Bank of Korea lifted its benchmark interest rate to 3 percent over two consecutive meetings in July and August describing the moves as preemptive steps to contain inflationary pressures. Consumer prices are projected to remain above the 2 percent target as strong exports and investment continue to support household incomes according to the central bank’s latest assessment. The rate hikes mark a shift from earlier policy settings aimed at supporting recovery.
Data compiled by the Korea Center for International Finance indicate that foreign banks have raised their 2027 growth outlooks to an average of 2.8 percent bringing them closer to the Bank of Korea’s 2.9 percent projection for next year. Six of the eight institutions upgraded their forecasts for 2027 in the latest revision cycle reflecting expectations that the semiconductor cycle will extend beyond the current year. The upward trend in projections has continued for six consecutive months as export momentum has exceeded initial expectations.
Exports of semiconductors topped $60 billion in September for the first time contributing to a record monthly trade surplus of $49.85 billion the Bank of Korea data shows. Officials have cautioned that the outlook remains subject to uncertainties including the duration of the current chip upcycle and developments in the Middle East. The central bank’s report nevertheless underscored the broadening base of the recovery beyond the technology sector alone.
