Samsung Electronics' semiconductor plant in Pyeongtaek, Gyeonggi Province / Courtesy of Samsung Electronics
A semiconductor export boom is underpinning Korea's economic growth, but deeper structural weaknesses continue to weigh on its long-term trajectory, economists and market analysts said Sunday.
Their view is that policy measures are needed to ease the economy's heavy reliance on semiconductors, while long-term efforts should focus on boosting growth in the face of a rapidly aging population and low birth rates.
According to the latest data from the Organization for Economic Cooperation and Development (OECD), the country's potential growth rate is estimated to decline to 1.71 percent this year from 1.92 percent in 2025. It is projected to decline further to 1.57 percent next year.
The OECD expects the quarterly rate to slow to 1.52 percent in the fourth quarter of 2027, pointing to a continued gradual slowdown.
Potential growth refers to the maximum level of output an economy can sustain by fully utilizing labor, capital and other resources without triggering inflation. It is widely seen as a measure of an economy's underlying strength.
The OECD data showed that Korea's potential growth rate has been on a steady decline since 2012, when it stood at 3.63 percent.
The data also highlight a widening gap with the United States. Since 2023, Korea has trailed the world's largest economy in potential growth, declining from a difference of 0.03 percentage points to a projected 0.38 percentage points in 2027.
Recent headline growth, supported by a strong semiconductor cycle, has overshadowed the Asian economy's falling growth potential and other underlying weaknesses.
Bank of Korea (BOK) data showed real gross domestic product (GDP) grew 1.7 percent in the January–March period from the previous quarter. Exports were the main driver, rising 5.1 percent, led by IT products such as semiconductors. The country's two chip heavyweights, Samsung Electronics and SK hynix, posted record-high earnings in the first quarter.
Source: Korea Times News
