Korea Economics: Reaping the Economic Rewards from the Semiconductor Windfall

Korea is poised to monetize the semiconductor super-cycle on a scale and with durability of historic proportions. We expect GDP growth to run above potential through 2026-27, forecasting 3.4% in 2026 and 2.7% in 2027 versus 1.1% in 2025, with the growth impulse broadening beyond tech as non-tech exports accelerate and capex and consumption improve faster than expected. AI-led semiconductor exports remain strong, and we forecast customs export growth in the high-40% range this year. We raise our 2026 consumption growth forecast to 2.6% from 2.2%. Against the stronger growth backdrop, we lift CPI inflation to 2.6% and core inflation to 2.4%;