Amid ongoing global trade uncertainties, South Korea plans to counter economic challenges in 2026 by capitalizing on the artificial intelligence boom and its semiconductor sector. Experts highlight robust exports and a U.S. tariff deal as growth drivers, while pointing to Chinese competition and weak domestic demand as key risks.
South Korea's economy is expected to sustain growth in 2026 through its semiconductor industry despite global uncertainties. The Bank of Korea raised its 2026 growth forecast to 1.8 percent from 1.6 percent, factoring in the strong recovery in the global semiconductor sector amid U.S. President Donald Trump's protectionist measures. The ASEAN+3 Macroeconomic Research Office projected 1.9 percent expansion, driven by solid exports.
November exports rose 8.4 percent year-on-year to over $61 billion, marking the sixth straight monthly gain. January-to-November shipments hit a record $640.2 billion, fueling hopes of surpassing $700 billion for the full year. Yet challenges persist, including foreign exchange volatility, intensifying rivalry with Chinese firms, and a slumping construction sector that comprises over 10 percent of GDP.
Joo Won, an economist at the Hyundai Research Institute, remarked, "It is likely South Korea will achieve economic growth of 1.8 percent, not because the situation will improve next year, but because conditions were extremely challenging this year." The won traded at 1,483.6 per dollar on Tuesday, close to its weakest since March 2009. Joo anticipates instability in the forex market during the first quarter of 2026 but stabilization thereafter.
Choe Byung-ho, an economics professor at Pusan National University, warned that export-reliant economies like South Korea will face heightened pressures from a global slowdown. "Domestic demand remains weak, and inflation is unstable," Choe said, urging long-term productivity enhancements and AI investments.
Park Jea-gun, a professor at Hanyang University, forecasts a continued boom in semiconductors fueled by AI demand for high-bandwidth memory chips. "Even considering upcoming new production lines by Samsung Electronics and SK hynix, supply will not catch up with demand," Park stated, predicting higher prices and dismissing an AI bubble. He expects supply shortages to ease by 2028 and calls for government support in energy and water for new factories.
To counter China's manufacturing ascent, Korea International Trade Association researcher Jin Ok-hee advised focusing on high-value differentiation in semiconductors through hardware-AI solutions, while pursuing non-price competition in chemicals and steel via environmental compliance. In machinery, firms should shift toward high-precision items like semiconductor and battery equipment.
