Driven by the chip boom, the Bank of Korea expects significant economic growth this year
The Bank of Korea stated that, supported by the chip boom and a stronger-than-expected global environment, South Korea's export-oriented economy is expected to grow "significantly higher" this year compared to last year.
The Bank of Korea told the National Assembly that the semiconductor market is experiencing a much stronger upcycle than in previous periods, and this momentum is likely to persist for at least the entire year.
The Bank of Korea will release its latest economic and inflation forecasts on Thursday. Analysts expect that the Bank will revise its 2026 GDP growth forecast from 1.8% in November last year to about 2%. The market widely believes that policymakers will keep the key interest rate unchanged at 2.5%. Preliminary data from the central bank showed that South Korea's economy grew by 1% last year.
The artificial intelligence boom has driven a surge in semiconductor demand, providing a boost to the country's slowing economy. Preliminary trade data released on Monday showed that chip shipments jumped 134% in the first 20 days of February, highlighting continued growth momentum.
However, the Bank of Korea warned that uncertainty remains elevated, including U.S. tariff policies and the pace of AI investment. After the U.S. Supreme Court overturned most of President Trump's tariff measures, concerns over global trade have resurfaced. This ruling could once again disrupt global trade flows and add new uncertainties to cross-border business activities.
The Bank of Korea also noted that financial markets have recently stabilized, especially the Korean won. Amid proactive stabilization measures and improving risk sentiment, the won has rebounded from its recent lows. However, the Bank cautioned that market volatility may rise again as domestic and international conditions change.
Since the end of December last year, the Korean won has risen by more than 2% against the U.S. dollar. At that time, the South Korean government and the Bank of Korea jointly intervened in the market and announced measures to stabilize the exchange rate.
Editor: Chen Yujia
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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