Half of economists forecast 1% growth range for Korea

More than half of economic experts expect South Korea's economic growth to remain in the 1 percent range this year, according to a local survey. The poll, conducted by Southernpost Inc. for the Korea Enterprises Federation (KEF), showed 54 percent of 100 economics professors holding this view. The average forecast stands at 1.8 percent, below the government's 2 percent outlook and the IMF's 1.9 percent projection.

A survey revealed that South Korea's economy is likely to grow in the low single digits this year. In a poll commissioned by the Korea Enterprises Federation (KEF) and conducted by Southernpost Inc., 54 percent of 100 economics professors predicted growth in the 1 percent range for 2026. Another 36 percent foresaw a shift to 2 percent starting in 2027, fueled by recovering consumption and demand, while 6 percent anticipated below 1 percent.

The economy expanded by 1 percent last year, down from 2 percent the year before. The average forecast of 1.8 percent falls short of the government's 2 percent target and the International Monetary Fund's (IMF) 1.9 percent estimate. Respondents projected the won-dollar exchange rate to fluctuate between 1,403 won and 1,516 won this year.

Nearly 60 percent of economists said the outcome of U.S.-South Korea tariff negotiations would negatively affect exports to the United States and domestic corporate investment. On the expanding use of artificial intelligence (AI) in workplaces, 92 percent viewed it as a solution to labor shortages and a boost to productivity, especially in manufacturing.

Almost 90 percent urged the government to implement strong measures against the overseas leakage of semiconductors and other core technologies, including severe penalties for violations. The survey results were released on January 25, 2026.

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Illustration depicting South Korea's 1% GDP growth in 2025 driven by exports amid construction weakness and Q4 contraction.
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South Korea's economy grows 1 percent in 2025

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South Korea's gross domestic product grew 1 percent in 2025 from the previous year, according to Bank of Korea data, but the fourth quarter saw an unexpected 0.3 percent contraction. Strong exports drove the annual figure despite weakness in construction. This marks half the 2 percent expansion of 2024.

An Asia-based economic surveillance organization has projected that South Korea's economy will expand by 1.9 percent next year, supported by growth momentum that began earlier this year. The assessment came in a report following its annual consultation with the South Korean government this month. Growth is expected to accelerate from 1 percent in 2025.

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Major financial institutions have raised their 2026 inflation forecasts for South Korea, citing the continued weakness of the Korean won against the U.S. dollar. According to Bloomberg's compilation from 37 institutions, the median projection stands at 2 percent, up 0.1 percentage point from 1.9 percent at the end of last month. The Bank of Korea has also warned that consumer inflation could reach the mid-2 percent range if the domestic currency remains weak.

South Korea's industrial output grew 0.9 percent in November, driven by strong semiconductor production, while retail sales fell 3.3 percent, the sharpest drop in 21 months. Data from the Ministry of Data and Statistics attributes the retail decline to the fading effects of the Chuseok holiday and base effects. Cumulative retail sales for January to November rose 0.4 percent, suggesting a possible positive annual figure.

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South Korea's inflationary pressure eased to the lowest level in five years in 2025, following the sharpest price growth in decades during the post-pandemic period. Consumer prices, a key gauge of inflation, increased 2.1 percent on-year, slightly above the Bank of Korea's 2 percent target. The figure marks the lowest annual level since 0.5 percent in 2020.

South Korean stocks closed slightly higher on January 30, extending their winning streak to four sessions and hitting a new record high as investors bought artificial intelligence shares despite bubble concerns. The advance was capped by U.S. President Donald Trump's vow to impose higher tariffs on South Korea. The Korean won fell 13.2 won to 1,439.5 against the U.S. dollar.

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South Korean companies reported improved growth and profitability in the third quarter, driven by robust semiconductor exports amid an AI boom. The Bank of Korea's data shows combined sales rose 2.1 percent year-on-year, reversing a prior decline. Key factors included rising exports of high-value products like HBM and DDR5.

 

 

 

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