The International Monetary Fund raised its forecast for South Korea’s economic growth to 2.6% for 2026 in its latest World Economic Outlook update released on July 8, giving the country the strongest projected expansion among major advanced economies as robust semiconductor and artificial intelligence-related exports continue to fuel momentum.
The revised estimate marks a 0.7-percentage-point increase from the IMF’s 1.9% forecast issued in April, tying Iran for the largest upward revision among the 30 economies covered in the fund’s midyear update.
South Korea is now expected to post the fastest growth among advanced economies this year. The United States is projected to expand 2.3%, followed by Spain at 2.1%. Australia is forecast to grow 1.9%, while Canada is expected to expand 1.1%. The Netherlands and the United Kingdom are each projected to grow 1.0%, with Japan, Germany, France and Italy all forecast to record growth below 1%.
The IMF said the stronger outlook reflects sustained strength in semiconductor exports and rising shipments of AI-related hardware.
In its report, the fund identified South Korea as one of the world’s four largest net exporters of AI-related hardware. It said the country’s economy expanded at an annualized 7.5% in the first quarter, sharply above its April estimate of 1.8%, as booming semiconductor and AI hardware exports offset the effects of the country’s heavy reliance on energy imports from the Middle East.
The IMF’s revised outlook is broadly consistent with recent upgrades by other major forecasting institutions. The Bank of Korea raised its 2026 growth forecast to 2.6% from 2.0% in May, while the Korea Development Institute increased its projection to 2.5% from 1.9%. Last month, the Organization for Economic Cooperation and Development also lifted its forecast to 2.6% from 1.7%.
The IMF also raised its forecast for South Korea’s 2027 economic growth to 2.5% from 2.1%, the highest among advanced economies and above projections from the Bank of Korea, the Korea Development Institute and the OECD.
South Korea’s Ministry of Economy and Finance said the upward revisions for both 2026 and 2027 suggest that growth driven by semiconductors and AI-related industries is likely to remain resilient into next year.
Globally, the IMF lowered its 2026 growth forecast to 3.0% from 3.1% while raising its 2027 projection to 3.4% from 3.2%, pointing to a modest improvement in the medium-term outlook despite continued uncertainty in the global economy.
