OECD Raises South Korea’s 2026 Growth Forecast to 3.7%, Biggest Upgrade in G20

South Korea Is the Only Country to Get a Boost of More Than 1 Percentage Point

“Semiconductor Supercycle” to Sustain Growth

The Organization for Economic Cooperation and Development raised its forecast for South Korea’s economic growth this year by 1.1 percentage points to 3.7%, marking the largest upward revision among Group of 20 economies. The 3.7% projection is also the highest among forecasts from major domestic and international institutions, including the government, the Bank of Korea, the Korea Development Institute and the Asian Development Bank.

In its interim economic outlook released on Sept. 23, the OECD revised up South Korea’s 2026 real GDP growth forecast to 3.7% from 2.6%. South Korea was the only country whose outlook was raised by more than 1 percentage point. India had the second-largest increase at 0.8 percentage point. The OECD lifted its forecasts for Japan and the US by 0.2 percentage point each, to 0.8% and 2.2%, respectively. If realized, the OECD forecast would put South Korea ahead of the US in economic growth for the first time in four years, since 2022.

The OECD sees South Korea’s 2027 growth at 2.6%. It forecasts consumer inflation at 3.0% this year and 2.7% next year. A Ministry of Economy and Finance official said the OECD assessed that strong growth in exports and production would drive South Korea’s economy this year, while a gradual recovery in consumption would continue next year.

South Korea’s Growth Upgrade Is the Biggest in the G20, Putting It on Track to Overtake the US for the First Time in Four Years

Next Year’s Forecast Also Raised Sharply, to 2.6% From 1.9%

The OECD publishes its regular global economic outlook in June and December each year, and revises those forecasts in interim reports in March and September. South Korea’s growth outlook was raised to 2.6% in June from 1.7% in March, then lifted again to 3.7% this month. That amounts to a 2 percentage-point increase in six months. After June, South Korea again saw the biggest upward revision among G20 economies in September.

The OECD’s forecast for South Korea this year is nearly four times the euro area’s 1.0%. Among G20 members, South Korea has the highest growth projection aside from emerging economies such as India at 7.1%, Indonesia at 5.2% and China at 4.5%. In its June outlook, the OECD said growth could exceed its forecast if demand for advanced semiconductors strengthened. That upside factor has now materialized.

The OECD projects South Korea’s growth next year at 2.6%, up 0.7 percentage point from its June forecast of 1.9%. That was also the largest upward revision in the G20. It now sees inflation this year at 3.0%, up 0.4 percentage point from its June forecast of 2.6%. The ministry official said the 3.7% projection appeared to reflect recent indicators, including South Korea’s 3.8% real growth in the first half. The higher inflation forecast also reflects the sharp upward revision to growth and higher international energy prices than in June.

The government projected 3.0% growth this year in its economic strategy for the second half, released in July. Last month, the Bank of Korea and the Korea Development Institute forecast growth of 3.3% and 3.2%, respectively. The Asian Development Bank, which released its Asian Development Outlook on Sept. 23, projected 3.2%, broadly in line with domestic institutions. That was 0.6 percentage point higher than its July forecast of 2.6%.

The ADB said it reflected stronger exports driven by rising global demand for artificial intelligence semiconductors. It also said private consumption would recover gradually, supported by expansionary fiscal policy and solid corporate earnings. Still, the bank cited geopolitical tensions, volatility in global financial markets and the risk that additional US tariff increases could weaken exports and investment as key downside risks.

Nam Jung-min, Hankyung.com reporter peux@hankyung.com