IMF Raises S. Korea Growth Most Among Major Economies on AI Boom

South Korea’s growth outlook received the biggest upgrade among the world’s 30 major economies in the International Monetary Fund’s latest projections, adding to evidence that the country’s artificial intelligence-driven semiconductor boom is overpowering the economic hit from the Middle East conflict.

The IMF raised its 2026 growth forecast for South Korea to 2.6% from 1.9% projected in April, while upgrading its 2027 estimate to 2.5% from 2.1%. It said strong external demand for semiconductors more than offset the negative impact of the war, placing South Korea among the world’s four largest net exporters of AI hardware alongside Taiwan, Thailand and Malaysia.

The revision highlights a similar reassessment by the Bank of Korea, which in May raised its own 2026 growth outlook to 2.6% from 2%. The central bank said stronger-than-expected chip exports, fiscal stimulus and buoyant equity markets would more than make up for the drag from higher energy prices.

The stronger outlook from the IMF underpins the BOK’s hawkish shift. Policymakers have argued that firmer growth, persistent inflation pressures, a weaker won and financial stability risks are increasingly pointing to the same policy response. Economists expect the central bank to raise its base rate to 2.75% when it sets policy on July 16.

Read also: IMF Says AI Helps Offset War-Driven Slowdown But Sees Risks

The IMF said South Korea’s economy expanded at an annualized 7.5% pace in the first quarter, far exceeding the 1.8% growth it had expected in April as robust chip shipments and AI hardware counteracted the country’s heavy reliance on imported energy.