SEOUL, August 31 (AJP) -Forecasts for South Korea's economic growth are racing higher as the artificial intelligence-driven semiconductor boom spills into investment and consumption, with nearly half of economists tracked by Bloomberg now expecting the economy to outperform the Bank of Korea's sharply upgraded 3.3 percent projection this year.
But the optimism drops off sharply beyond 2026.
Of 42 domestic and overseas institutions surveyed by Bloomberg as of Aug. 28, 20 forecast growth above the BOK's 3.3 percent estimate for this year, while one matched it. For 2027, however, 39 of the 42 expect growth to fall short of the central bank's unusually bullish 2.9 percent projection.
The divide suggests international banks are increasingly convinced that Korea's chip-led expansion has enough
momentum to deliver an exceptionally strong 2026, but remain far less certain that the boom and its spillover into the broader economy can be sustained next year.
The upward shift in this year's expectations has been rapid.
Twenty-nine of the 42 institutions now expect Korea's real gross domestic product to expand by at least 3 percent in 2026, up from just 11 in June. Fourteen forecast growth of 3.5 percent or more, more than double the six that did so two months ago.
The median forecast has climbed to 3.3 percent from 2.6 percent in June, matching the BOK's latest projection.
At the top end, Capital Economics and ING Financial Markets expect growth of 4 percent. JPMorgan and NAB/BNZ forecast 3.8 percent, while Citi and Bloomberg Economics see 3.7 percent. iM Securities projects 3.6 percent, with ANZ, Crédit Agricole, DBS, DekaBank and Deutsche Bank at 3.5 percent.
Several have made unusually large revisions.
ING raised its forecast by a full percentage point from 3 percent in June to 4 percent, arguing that semiconductor strength is increasingly feeding into private consumption and investment as well as exports.
Crédit Agricole and DBS lifted their projections by 0.9 percentage point to 3.5 percent, while Deutsche Bank raised its estimate by 0.8 point. Citi moved to 3.7 percent from 3.1 percent.
The revisions reflect how quickly expectations have had to catch up with Korea's semiconductor cycle as demand for advanced memory used in AI infrastructure repeatedly exceeded forecasts.
The BOK made much the same reassessment on Aug. 27, lifting its own 2026 growth estimate to 3.3 percent from 2.6 percent in May.
The central bank said exports and investment should maintain strong growth as the semiconductor sector performs better than expected, while improving incomes should strengthen the recovery in consumption.
That upgrade came on the same day the BOK raised its benchmark interest rate for a second consecutive meeting to 3 percent, making the strength of the growth reassessment particularly notable.
Higher interest rates would ordinarily be expected to restrain consumption and investment. Instead, the scale of the semiconductor boom has so far been strong enough for economists to keep lifting their growth estimates even as monetary policy tightens.
The BOK's 2026 forecast has risen particularly dramatically over the past nine months.
As recently as November, the central bank expected the economy to expand just 1.8 percent this year. Its latest 3.3 percent estimate is 1.5 percentage points higher, reflecting one of its largest upward reassessments in years.
Inflation expectations have not moved in tandem.
The median Bloomberg forecast for consumer price inflation has remained at 2.7 percent since June. The BOK likewise kept its headline inflation forecast at 2.7 percent for this year, although it raised its underlying core inflation outlook as stronger demand adds to existing cost pressures.
The outlook beyond this year however differs.
The median private-sector forecast for 2027 is only 2.3 percent, up modestly from 2.1 percent in June but a full 0.6 percentage point below the BOK's 2.9 percent projection.
Only three of the 42 institutions surveyed expect growth above the central bank's forecast, with Korean Re projecting 3.5 percent, JPMorgan 3.3 percent and Citi 3 percent.
AJP Takeaways
○ South Korea's 2026 growth outlook is rising rapidly: 29 of 42 institutions tracked by Bloomberg now forecast growth of at least 3 percent, compared with 11 in June.
○ Nearly half are more bullish than the Bank of Korea: 20 forecasters expect growth above the BOK's upgraded 3.3 percent projection, with Capital Economics and ING Financial Markets at 4 percent.
○ The consensus breaks down in 2027: The Bloomberg median stands at 2.3 percent and 39 of 42 forecasters are below the BOK's 2.9 percent projection, highlighting doubts over how long the chip-led boom can last.
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