Seoul: South Korea’s economy is set to grow at a faster pace than previously anticipated, with a projected growth rate of 2.5% for 2026, driven by strong export performance, particularly in the semiconductor industry, according to a state-run think tank.
According to Emirates News Agency, the Korea Institute for Industrial Economics and Trade (KIET) has revised its growth forecast from the earlier estimate of 1.9%, published late last year, to 2.5%. This revision is attributed to the robust performance in exports and investment, especially within the semiconductor and IT sectors, along with the government’s expansionary fiscal policies, despite challenges such as energy supply volatility from the U.S.-Israeli conflict with Iran.
KIET forecasts that South Korea’s yearly exports will likely reach an unprecedented US$924.4 billion in 2026, marking a more than 30% increase from the previous year, fueled by the growing demand for semiconductors and ICT products essential for AI infrastructure. The country’s annual exports first exceeded the $700 billion threshold in 2025.
The think tank also anticipates that this export boom will result in a significant trade surplus of $220 billion for South Korea in 2026. KIET President Kwon Nam-hoon noted that investment and export growth, primarily driven by the AI and semiconductor sectors, have exceeded expectations. Moreover, the anticipated impact of U.S. tariff policies has not been as pronounced as initially expected.