South Korea 2026 Outlook Update

ING has upgraded its 2026 GDP growth outlook for South Korea to 4%, driven by a powerful semiconductor-led export cycle and strong domestic investment.

Key Takeaways

• 1.ING has raised its 2026 South Korea GDP growth forecast to 4% from 3% due to stronger-than-expected semiconductor momentum and improved supply conditions.
• 2.The Bank of Korea is expected to hike rates by 100 bp through 1H27, targeting a terminal rate of 3.50% to address demand-driven inflation.
• 3.A K-shaped recovery is emerging, characterized by robust facility investment fueled by the semiconductor boom and sluggishness in the construction sector.

Table of Contents

• Thriving semiconductors drive meaningful recovery in domestic demand
• GDP is expected to grow 4.0% YoY in 2026
• Export momentum likely to stay strong beyond 2026
• Semiconductors are boosting both exports and imports
• Strong chip pricing supporting record current account surplus in 2026
• DRAM price to remain strong while current account surplus to double
• K-shaped recovery in investment; positive spillover to facility investment vs soft construction
• Consumption positive, but income inequality seen widening
• Positive wealth effects are expected to support consumption
• Fiscal outlook improves on stronger tax revenue
• Fiscal balance to improve thanks to strong tax revenue
• Moderating growth expected in 2Q26 amid energy shocks
• Better terms of trade and firm exports are likely to boost GDP throughout 2026
• Inflation sticky despite sharp commodity price correction
• CPI is expected to stay above 3%, supported by firm demand
• Bank of Korea expected to deliver 100 bp of hikes by 1H27

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