ADB raises S. Korea's growth forecast for this year amid chip boom

Jul 09, 2026, 09:41 am

The Asian Development Bank (ADB) has sharply upgraded its economic growth forecast for South Korea this year, reflecting robust momentum in the semiconductor sector driven by expanding global artificial intelligence (AI) demand.

According to the Ministry of Finance and Economy on July 9, the ADB projected South Korea's economy to grow by 2.6% this year in its latest Asian Development Outlook report. This marks a significant 0.7 percentage point upward revision from its previous forecast of 1.9% announced in April. The bank also raised its growth outlook for next year by 0.1 percentage point, from 1.9% to 2.0%.

The ADB cited stronger-than-expected economic growth in the first quarter and effective government policies addressing Middle East conflicts, which mitigated economic shocks, as the primary reasons for the upgrade.

In particular, the bank projected that surging semiconductor exports fueled by expanding global investments in AI will serve as the primary growth engine for South Korea over the next two years. While rising production costs from elevated energy prices and supply chain disruptions present downside risks, the robust chip boom is expected to largely offset these negative impacts.

Private consumption is evaluated to maintain a stable trend, supported by a strong stock market, improved corporate earnings in the information technology (IT) sector, and government support measures. However, prolonged disruptions in energy supplies, the potential reimposition of U.S. tariffs, and stock market corrections were identified as potential downside risks.

Other advanced economies in the Asia-Pacific region are also expected to benefit from the turnaround in the semiconductor industry. Taiwan's growth forecast for this year was revised upward by 1.9 percentage points to 9.5%, while Singapore (3.2%) and Hong Kong (3.0%) saw their projections raised by 1.2 percentage points and 0.4 percentage point, respectively. Conversely, outlooks for Japan (0.7%), Australia (2.0%), and New Zealand (1.6%) were either maintained or slightly downgraded.

Meanwhile, inflation forecasts were edged higher. Anticipating that rising international energy prices will feed into consumer costs, the ADB forecast South Korea's inflation rate to reach 2.7% this year, up 0.4 percentage point from its April outlook. The inflation projection for next year was also adjusted upward by 0.2 percentage point to 2.2%.

Lee Ji-hoon

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