BOK May Raise 2026 Growth Forecast to 2.5%-2.6% on Semiconductor Supercycle

The Bank of Korea is due to release revised economic projections on May 28, and market experts expect it to raise this year’s real gross domestic product growth forecast from 2.0% to the mid-2% range.

The upgrade reflects stronger-than-expected semiconductor exports driven by the artificial intelligence boom, which have continued to underpin South Korea’s economic growth.

Bond and financial-market experts expect the BOK to lift its 2026 growth outlook from 2.0% to at least the mid-2% range in the updated forecasts, according to industry estimates compiled on May 25.

Preliminary data showed first-quarter real GDP grew 1.7% from the previous quarter.

That was the strongest quarter-on-quarter expansion since the third quarter of 2020, when the economy grew 2.2%, and nearly double the BOK’s February forecast of 0.9%.

Exports, led by semiconductors, were the main driver of the first-quarter upside surprise.

Exports rose 5.1% from the previous quarter, rebounding from a 1.7% contraction in the fourth quarter of last year.

From a year earlier, exports increased 10.3%.

Experts expect the export rally to continue for the time being because the fundamentals of the semiconductor supercycle remain solid.

Yoon Yeo-sam, an analyst at Meritz Securities, said the BOK could raise its growth forecast to 2.6% from 2.0%.

The central bank is unlikely to make a more aggressive upward revision, he said, though exports remain exceptionally strong.

Lee Kyung-min, an analyst at Daishin Securities, said South Korea’s GDP growth outlook could be raised as high as 2.8%, with earnings momentum remaining firm through next year.

As the global economy improves on the back of manufacturing, South Korea’s stock market and economy stand to see stronger semiconductor-led momentum, he added.

Woo Hye-young, an analyst at LS Securities, said growth in the upper-mid 2% range now appears probable this year.

She added that growth could slow to the mid-1% range next year as base effects kick in.

Recent upward revisions by major domestic and overseas research institutions also support the case for a higher BOK forecast.

The Korea Development Institute said in a revised outlook released on May 13 that South Korea’s economy would grow 2.5% this year.

That was 0.6 percentage point higher than its February forecast of 1.9%.

KDI also raised its forecast for total export growth this year to 4.6% from 2.1% in February, based on an optimistic view that global semiconductor trade could grow by nearly 40%.

Jung Kyu-chul, head of KDI’s macroeconomic and financial policy research division, said the semiconductor cycle recovered faster than expected as AI demand spread.

Without geopolitical risks in the Middle East, the institute would have presented a growth forecast above 2.5%, he said.

Other private and state-run research institutions have reached similar conclusions.

The Korea Institute of Finance said on May 11 that this year’s growth rate would be 2.8%, up 0.7 percentage point from its November forecast of 2.1%.

The Hyundai Research Institute also said in a revised outlook released on May 3 that growth this year would reach 2.7%, up 0.8 percentage point from its September forecast of 1.9%.

Against that backdrop, the government also appears set to raise its own growth outlook for this year from the 2.0% projection set at the start of the year.

Koo Yun-cheol, deputy prime minister and finance minister, said at a press briefing on May 11 that South Korea’s economy is expected to grow by more than 2% this year.

The key question now is by how much it will exceed that level, he said.

Most major global investment banks have already revised up their forecasts for South Korea’s growth this year, Koo added.

The government plans to present a detailed outlook in its economic growth strategy for the second half of next month, he said.

Park Sang-kyung, Hankyung.com reporter highseoul@hankyung.com