AMRO Raises South Korea’s 2026 Growth Forecast to 3.3%

The ASEAN+3 Macroeconomic Research Office has raised its forecast for South Korea’s economic growth in 2026 to 3.3 percent, marking a second consecutive upward revision and offering a stronger outlook for Asia’s fourth-largest economy.

AMRO also lifted its projection for 2027 growth to 2.7 percent. The Singapore-based regional surveillance organization increased this year’s estimate by 0.2 percentage point from its July forecast, while raising next year’s figure by a larger 0.5 percentage point from 2.2 percent. The revisions were included in an update to its ASEAN+3 Regional Economic Outlook.

The latest assessment points to a firmer expansion in South Korea than AMRO expected three months earlier, but it also reflects a mixed inflation picture. The organization raised its forecast for Korean consumer price growth this year to 2.7 percent from 2.6 percent. For 2027, it lowered the inflation estimate by 0.1 percentage point to 2.3 percent.

For the broader ASEAN+3 region, which includes the 10 members of the Association of Southeast Asian Nations as well as South Korea, China and Japan, AMRO projected growth of 4.1 percent in both 2026 and 2027. It said resilient demand for exports and investment linked to artificial intelligence could partly offset weaker domestic demand caused by higher energy prices.

However, the organization judged that risks to the regional outlook remain tilted to the downside. A slowdown in AI-related demand could weaken exports and investment, a concern with particular relevance for South Korea’s technology-heavy manufacturing sector. Conflict in the Middle East could also lift energy, shipping and production costs, while El Niño conditions could add pressure to food prices.

AMRO identified financial and trade risks as additional sources of uncertainty. A correction in stock markets led by technology shares, higher government bond yields in major economies and sudden changes in expectations for US monetary policy could unsettle regional markets. Further protectionist measures could raise trade costs and disrupt supply chains across Asia.

The report also highlighted longer-term structural challenges, including geoeconomic fragmentation, population aging and climate change. For South Korea, the upgraded forecasts provide a more favorable near-term baseline, but the balance of risks suggests that continued growth will depend heavily on external demand, especially the durability of the AI investment cycle, as well as the evolution of energy prices and global trade policy.