IMF Raises South Korea’s 2026 Growth Forecast to 2.6%, Highest Among Advanced Economies

The International Monetary Fund raised its forecast for South Korea’s economic growth this year to 2.6% from 1.9%, a 0.7 percentage-point increase. The revision was the largest among 30 major economies, tied with Iran. The IMF also lifted its outlook for next year to 2.5% from 2.1%.

South Korea’s growth this year and next will be the highest among advanced economies, the Ministry of Economy and Finance said on July 8, citing the IMF’s July World Economic Outlook.

The IMF identified South Korea as one of the world’s top four net exporters of artificial intelligence hardware. It said strong semiconductor and AI hardware exports helped drive first-quarter growth to an annualized 7.5%, well above the 1.8% forecast in April, despite the country’s heavy dependence on Middle Eastern energy.

The new forecast is in line with recent upgrades from other institutions. The Bank of Korea and the Organization for Economic Cooperation and Development both project South Korea’s economy to grow 2.6% this year, while the Korea Development Institute sees 2.5% growth.

The finance ministry said the upgrades for both this year and next suggest growth momentum led by semiconductors and AI could extend into next year.

The IMF lowered its forecast for global growth this year by 0.1 percentage point to 3.0%. It raised next year’s estimate by 0.2 percentage point to 3.4%.

Growth in advanced economies this year was revised down by 0.1 percentage point to 1.7%. The US was left unchanged at 2.3%. The euro area was cut to 0.9%, and Japan to 0.6%. Emerging market and developing economies were also revised down by 0.1 percentage point to 3.8%. China’s forecast was raised to 4.6%, while India’s was lowered to 6.4%.

Global inflation is projected at 4.7% this year, reflecting higher energy and food prices. The IMF said tensions in the Middle East and trade fragmentation are the main downside risks to the global economy. It called for price stability, targeted fiscal support for vulnerable groups, and structural reforms to strengthen energy security and the capacity to respond to AI.

Han Kyung-woo, Hankyung.com reporter, case@hankyung.com