ADB Raises South Korea’s 2026 Growth Forecast to 3.2%

The Asian Development Bank has raised its forecast for South Korea’s economic growth in 2026 to 3.2 percent, up sharply from the 2.6 percent estimate it issued in July, as global demand for artificial intelligence chips supports exports and corporate earnings.

The Manila-based development bank also upgraded its outlook for 2027. It now expects Asia’s fourth-largest economy to expand by 2.3 percent next year, 0.3 percentage point above its previous projection. The latest revision extends a series of increasingly optimistic assessments from the bank, which had forecast 1.9 percent growth for South Korea in April before lifting the figure to 2.6 percent in July.

The stronger outlook reflects South Korea’s central role in the global semiconductor supply chain. Accelerating investment in artificial intelligence infrastructure has increased demand for advanced memory chips and other components produced by Korean manufacturers, helping exports remain a key engine of growth.

The bank said expansionary fiscal policy and solid corporate profits are also contributing to a gradual recovery in private consumption. That combination suggests the benefits of the export upturn could spread more broadly through the domestic economy, although the strength and durability of household demand remain important factors to watch.

Despite the upgrade, the ADB identified several threats to the outlook. Rising geopolitical tensions and greater volatility in global financial markets could undermine investment and trade. Additional increases in U.S. tariffs could also weigh on South Korean exports, leaving the economy exposed to policy changes abroad even as technology demand remains strong.

The bank kept its inflation forecasts unchanged. It expects South Korean consumer prices to rise 2.7 percent in 2026 and 2.2 percent in 2027. Government measures aimed at limiting price increases are expected to offset some of the pressure from higher global energy costs and firmer domestic demand.

The ADB’s revised growth estimate is above the South Korean government’s current projection. The Ministry of Finance and Economy raised its own 2026 forecast to 3 percent in July, citing the semiconductor supercycle. The state-run Korea Development Institute followed in August by lifting its forecast to 3.2 percent from 2.5 percent.

Taken together, the revisions point to a stronger-than-previously-expected expansion led by technology exports. They also underline how heavily the outlook depends on sustained global AI investment and stable trade conditions.