Bank of Korea Gov. Shin Hyun-song speaks at a press conference following a Monetary Policy Board meeting at the central bank's headquarters in Seoul, Thursday. Korea Times photo by Shim Hyun-chul
The Bank of Korea (BOK) raised its 2026 growth forecast to 2.6 percent from its previous projection of 2 percent, Thursday, citing a robust outlook for the country's semiconductor exports amid the global artificial intelligence (AI) boom.
The central bank viewed continued strength in the chip sector as outweighing the economic downturn risks stemming from the prolonged conflict in the Middle East.
"The sustainability of the current improvement in growth will ultimately depend on how long the current semiconductor cycle lasts," BOK Gov. Shin Hyun-song said during a press conference.
"There are expectations that the semiconductor cycle would remain strong for a considerable period, as chip prices could stay elevated and semiconductors are not products whose supply can be ramped up quickly in the short term," he added.
Shin also stressed that the benefits of the semiconductor boom would spread across the broader economy, dismissing concerns that gains would be concentrated solely in the chip sector.
"The semiconductor sector will benefit the most directly at first, but there will also be trickle-down effects. Wages and investment will rise, helping spread positive momentum across the broader economy," he said. "Their strong earnings would likely boost corporate tax revenue, benefiting the broader public."
The central bank's upward revision of its 2026 growth forecast appears to reflect stronger-than-expected first-quarter growth, with gross domestic product expanding 1.7 percent from the previous quarter, driven largely by semiconductor exports. That was nearly double the central bank's earlier forecast of 0.9 percent.
The BOK's latest forecast is also significantly higher than projections released earlier this year by major international organizations, including the OECD's1.7 percentforecast in March and the International Monetary Fund's 1.9 percent projection.
Bank of Korea Gov. Shin Hyun-song, center, bangs the gavel to open a Monetary Policy Board meeting at the central bank in Seoul, Thursday. It was Shin's first rate-setting meeting since he took office on April 21. Korea Times photo by Shim Hyun-chul
Source: Korea Times News
