The Bank of Korea raised its 2026 gross domestic product growth forecast by 0.7 percentage points to 3.3%, citing a stronger semiconductor boom and broader spillovers that more than offset uncertainty from the Middle East. It projects growth of 2.9% in 2027. The 2026 consumer price inflation forecast remains unchanged at 2.7%, before easing to 2.3% in 2027. The growth upgrade also reflects revised historical data, three large projects and a smaller-than-expected impact from Middle East disruptions. Core inflation is forecast at 2.5% in both 2026 and 2027 as cost shocks pass through and demand pressures strengthen. Robust semiconductor exports are expected to lift the 2026 current account surplus to a record USD 450 billion. The outlook remains highly uncertain, particularly around the semiconductor cycle and the Middle East. Alternative scenarios indicate that semiconductor developments could shift 2027 growth by between 0.4 percentage points below and 0.6 percentage points above the baseline, while Middle East developments could move 2027 inflation between 0.3 percentage points below and 0.4 percentage points above the baseline.
2026-08-27Bank of Korea
Bank of Korea raises 2026 growth forecast to 3.3%, maintains 2.7% inflation outlook
The Bank of Korea raised its 2026 growth forecast by 0.7 percentage points to 3.3% as the semiconductor boom offsets Middle East uncertainty, with growth projected at 2.9% in 2027. It maintained its 2026 inflation forecast at 2.7% and expects inflation to ease to 2.3% in 2027. The semiconductor cycle and Middle East developments remain the main risks.