The Bank of Korea published its January 2026 Recent Economic Developments report, keeping its baseline outlook broadly in line with the November 2025 projections. Korea’s economy is expected to grow 1.8% in 2026, supported by a robust semiconductor cycle and recovering consumption, while CPI inflation is projected to remain stable as exchange-rate-driven upside pressures are offset by weak global oil prices and government price-stabilisation measures. The report flags considerable uncertainty around the semiconductor and AI cycles, the global trade environment including the impact of U.S. tariffs on non-IT exports and investment, and movements in the exchange rate and oil prices. Globally, growth is expected to be around 3% in 2026, with the United States in the low-2% range, the euro area continuing moderate growth, and China slowing to the mid-4% range. For Korea, 2025 growth is seen broadly in line with the prior 1.0% outlook, while 2026 growth is expected to strengthen led by domestic demand and easing weakness in construction investment; CPI inflation is projected at 2.1% (core 2.0%) and expected to ease toward around 2% and then hover near the 2.0% target. The current account surplus forecast for 2026 remains USD 130 billion, and employment growth is projected at +150,000, with public-sector gains moderating and private-sector hiring improving despite constraints from AI adoption and weak non-IT sectors.

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