South Korea's Economy Stuck in 1% Growth, Economists Warn

In a survey conducted by Southernpost Inc. at the request of the Korea Enterprises Federation (KEF), 54 percent of 100 economics professors polled said South Korea is likely to post growth in the 1 per cent range this year, reports Yonhap news agency.

Another 36 per cent projected Asia's fourth-largest economy to achieve growth in the 2 per cent range starting in 2027, driven by a gradual recovery in consumption and demand. Six per cent said growth would fall below 1 per cent, according to the survey.

On average, the economists forecast the South Korean economy to grow 1.8 percent this year, slightly below the government's 2 percent outlook and the International Monetary Fund's (IMF) 1.9 percent projection.

South Korea's economy expanded 1 percent last year, down from 2 percent growth the previous year.

Regarding exchange rates, the respondents projected the won-dollar rate to move between 1,403 won and 1,516 won this year.

Nearly 60 percent of the economists said the outcome of U.S.-South Korea tariff negotiations would have a negative impact on exports to the United States and on domestic corporate investment.

Asked about the growing use of artificial intelligence (AI) in workplaces, 92 percent said the spread of AI would serve as a substitute for labor shortages and improve productivity, particularly in manufacturing.

Nearly 90 percent also called on the government to adopt effective measures to prevent the overseas leakage of semiconductors and other core technologies, including imposing strict penalties on related violations.

Meanwhile, major global investment banks (IBs) have upgraded their forecasts for South Korea's economic growth, citing a strong semiconductor upcycle, but warned that the economy is showing signs of an uneven "K-shaped recovery," a report by the international finance centre said.

According to a report by the Korea Center for International Finance (KCIF), the median growth forecast by major foreign institutions for 2026 was raised to 2.0 percent in January from 1.8 percent in early November.

- IANS