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Global Banks Boost Korea's 2026 Growth Outlook to 2.1% on Chip Boom

Major global investment banks have collectively raised their average growth forecast for South Korea's economy in 2026 to 2.1%, citing a stronger-than-expected global semiconductor cycle. This outlook is more optimistic than projections from the Bank of Korea and the Seoul government. The report highlights that semiconductor export growth is expected to more than double, providing a key boost. Concurrently, the government plans substantial financial support for the automotive sector, which recently achieved record export figures.

Key Points: S. Korea 2026 Growth Forecast Raised to 2.1% by Global IBs

  • Growth forecast raised to 2.1%
  • Driven by semiconductor upcycle
  • Outpaces central bank projection
  • Auto exports hit record $72B
  • Govt pledges $317M for auto tech
2 min read

S. Korea's 2026 growth outlook average among global IBs raised to 2.1 pc

Major investment banks upgrade South Korea's 2026 economic outlook to 2.1%, driven by a resilient global semiconductor cycle and strong auto exports.

"Expectations remain high that the global semiconductor cycle will stay stronger and more resilient than previously anticipated - KCIF Report"

Seoul, Feb 5

Major global investment banks have upgraded their forecasts for South Korea's economic growth this year, citing an upcycle of the global semiconductor industry, a report by a financial organisation said on Thursday.

The average forecast for economic growth of Asia's fourth-largest economy by eight major global investment banks (IBs) stood at 2.1 percent as of end-January, up 0.1 percentage point from their median outlook published a month earlier, according to the report by the Korea Center for International Finance (KCIF).

It is more positive than the Bank of Korea (BOK)'s projection of 1.8 percent and the Seoul government's forecast of 2 percent, reports Yonhap news agency.

Of the IBs, Citi raised its forecast to 2.4 percent from 2.2 percent, while UBS increased its projection to 2.2 percent from 2 percent.

Citi has expected the growth rate of semiconductor exports to more than double to 54 percent in 2026 from last year's 22 percent.

Nomura maintained its forecast at 2.3 percent, while Barclays and Bank of America kept their projections unchanged at 2.1 percent and 1.9 percent, respectively. JP Morgan also left its outlook unchanged at 2 percent, and HSBC at 1.8 percent.

Goldman Sachs, however, lowered its forecast to 1.8 percent from 1.9 percent.

Expectations remain high that the global semiconductor cycle will stay stronger and more resilient than previously anticipated, though some institutions have warned of headwinds facing non-tech industries amid lingering risks from the United States' aggressive tariff policies.

Meanwhile, the industry ministry said it plans to provide up to 464.5 billion won (US$317.6 million) in support for the automotive sector this year to help the local industry secure competitiveness in cutting-edge technologies, such as autonomous driving.

The plan unveiled by the Ministry of Trade, Industry and Resources comes after South Korea's auto exports hit a record high of US$72 billion last year, despite impacts from U.S. tariffs.

Of the total, 382.7 billion won will be invested in the research and development of core auto technologies, including autonomous driving systems, and electronic and hydrogen-powered vehicles.

A public-private alliance on autonomous driving formed last year will lead various projects in self-driving technologies, the ministry said.

- IANS

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Reader Comments

R
Rohit P
A 2.1% growth forecast seems modest but positive. The key takeaway is the semiconductor upcycle. With global demand for electronics, countries investing in tech will benefit. Hope India's 'Make in India' for electronics catches a similar wave! 📈
D
David E
While the upgrade is small (0.1%), the consistency among most IBs is a good sign. However, Goldman Sachs lowering its forecast is a reminder of the risks, especially from US tariff policies. Non-tech industries might struggle globally.
A
Aditya G
The focus on autonomous driving and hydrogen vehicles is the real story here. South Korea is planning for the future. India needs similar aggressive investment in green and smart mobility tech, not just catching up.
S
Sarah B
$317 million for auto sector support seems like a targeted and sensible investment, especially after record exports. It shows how strategic government spending in R&D can help industries stay competitive against global headwinds. A lesson in industrial policy.
K
Karthik V
With all due respect to the positive outlook, we must remember these are just forecasts. The actual growth depends on global trade conditions. The US tariffs are a major wild card. Cautious optimism is the way. Let's see if the semiconductor boom lasts.

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