Chip boom lifts Korea's growth outlook as inflation persists
Korea's growth in 2026 and 2027 will exceed the August forecasts of 3.3 and 2.9 percent, the Bank of Korea (BOK) said on October 22, 2026. It projects prolonged above-target inflation as cost pressures feed through and demand strengthens.
Stronger growth meets persistent inflation
The BOK projects growth above its August outlook as semiconductor exports and investment strengthen and benefits spread beyond IT.
It gives no revised growth figures for 2026 or 2027.
Domestic demand and improving non-IT conditions support its Q4 assessment.
Q3 headline inflation eased to 2.9 percent from 3.0 percent in Q2, while core inflation rose to 2.9 percent from 2.4 percent.
The bank projects 2026 headline and core inflation broadly matching August forecasts of 2.7 and 2.5 percent.
For 2027, both will exceed earlier forecasts of 2.3 and 2.5 percent, respectively.
Accumulated costs passing through to prices and strengthening demand underpin the inflation outlook.
Export gains widen the surplus
Robust chip exports underpin a current account surplus above the previous forecast.
A lower USD/KRW exchange rate supports overseas travel, widening the services deficit slightly.
Employment growth and the employment rate remain broadly on the previous forecast for 2026 and 2027.
Global AI investment supports trade, but AI monetization, the chip cycle, Middle East tensions and financial conditions remain risks.
Oil volatility, demand, exchange rates and government price measures add two-sided inflation risks.
Higher growth, longer price pressure
The bank pairs a stronger growth outlook with a longer period of above-target inflation.
Semiconductor spillovers support activity, while cost pass-through and demand sustain price pressures.
The report gives directional revisions rather than new numerical forecasts.
Source: Recent Economic Developments (October 2026)
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