"Chip fever" takes South Korea's economy soaring! South Korea raises GDP growth forecast to five-year high

"Chip fever" takes South Korea's economy soaring! South Korea raises GDP growth forecast to five-year high.

In the semi-annual economic policy plan announced by the South Korean government on Tuesday, it significantly raised South Korea's economic growth forecast for this year to 3% from the previous 2% - which will be South Korea's highest economic growth rate in the past five years.

At the same time, the South Korean government promised to continue to accelerate investment in artificial intelligence to enhance South Korea's economic performance.

South Korea raises GDP growth forecast South Korea's Ministry of Finance stated in its semi-annual economic policy plan that driven by the global semiconductor industry boom, South Korea's economic growth rate is expected to be 3.0% this year, which is the strongest growth rate since 2021 and significantly higher than last year's economic growth rate of 1.1%.

The department said it would accelerate policies for the "three major super projects" - namely chips, AI data centers and physical AI - and increase the potential growth rate of South Korea's economy to 3% from the current estimate of less than 2%.

On Monday this week, the South Korean government just announced that it will increase budget expenditure by at least 10% in 2027 to 800 trillion won (approximately US$532.73 billion), giving priority to supporting the above-mentioned three major super projects and gaining support through an increase in tax revenue from the semiconductor industry.

"Although strong economic indicators such as exports brought about by the boom in the semiconductor industry are obviously favorable factors, at the same time, our economy still needs to overcome some tasks," said Lee Hyoung Il, South Korea's deputy finance minister.

South Korea, Asia's fourth-largest economy, posted its strongest growth in nearly six years last quarter, driven by a surge in chip exports driven by a surge in global investment in artificial intelligence.

Strive to become one of the world's four largest exporting countries South Korea's Ministry of Finance has also set goals to build South Korea into one of the world's top four exporters and increase South Korea's per capita national income to $50,000 from an estimated $40,000 this year.

According to WTO data, China, the United States and Germany have consistently ranked among the top three exporting countries in the world in terms of export value. Japan, South Korea, the Netherlands, Italy and other countries have been among the top ten exporting countries in the world all year round, but their rankings often change.

In response to persistently high inflation, a weak local currency and rising bond yields related to conflicts in the Middle East, the South Korean government has pledged to take a series of measures, including setting a fuel price cap, extending foreign exchange regulatory easing policies and providing low-cost policy loans in the second half of the year.

Affected by high oil prices, South Korea's inflation rate is expected to be 2.6% in 2026, higher than 2.1% in January, faster than the 2.1% growth rate in the same period in 2025, and the fastest rate since 2023.

Regarding the economic growth prospects in 2027, the South Korean Ministry of Finance predicts that South Korea’s economic growth rate will be 2.2% and the inflation rate will be 2.2% next year. (

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