The Bank of Korea indicated that the nation's export-driven economy is anticipated to grow "significantly higher" this year than in the previous year, supported by a semiconductor boom and a stronger-than-expected global environment.
The central bank informed the National Assembly that the semiconductor market is exhibiting a more robust upcycle compared to previous cycles, and this trend is expected to persist at least throughout the current year.
The Bank of Korea is scheduled to release its updated economic growth and inflation forecasts on Thursday. Analysts predict the bank will raise its 2026 GDP growth forecast to approximately 2%, up from the 1.8% projection made last November. It is widely anticipated that policymakers will maintain the benchmark interest rate steady at 2.5%. According to preliminary data from the central bank, the South Korean economy grew by 1% last year.
The artificial intelligence boom is driving a sharp increase in demand for semiconductors, providing a boost to the nation's slowing economy. Preliminary trade data released on Monday highlighted the persistence of this growth momentum, showing that chip exports surged by 134% in the first 20 days of February.
However, the Bank of Korea cautioned that uncertainties remain elevated, including factors such as US tariff policies and the pace of AI-related investments. Concerns over global trade have resurfaced following a US Supreme Court decision that overturned a significant portion of former President Trump's tariff measures. This ruling has the potential to disrupt global trade flows once again and introduce new uncertainties for cross-border commercial activity.
The central bank also noted that financial markets have recently shown signs of stabilization, particularly the South Korean won. The currency has rebounded from its recent lows, supported by proactive stabilization measures and an improvement in risk sentiment. Nevertheless, the bank warned that market volatility could increase again as domestic and international conditions evolve.
Since the end of December last year, the won has appreciated by over 2% against the US dollar. During that period, the South Korean government and the central bank conducted joint market interventions and announced measures aimed at stabilizing the exchange rate.
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