The Organisation for Economic Co-operation and Development (OECD) lifted its 2026 growth forecast for South Korea to 3.7 percent from 2.6 percent in June, a 1.1 percentage-point upgrade.
The Asian Development Bank (ADB), in a separate outlook released the same day, raised its forecast to 3.2 percent from 2.6 percent in July.
The revisions reinforce a widening consensus that South Korea's semiconductor-led expansion is proving considerably stronger than expected, although the OECD also warned that higher energy prices are adding to inflationary pressure.
The OECD's 3.7 percent projection is higher than forecasts from the Bank of Korea at 3.3 percent, the Korea Development Institute and ADB at 3.2 percent, Moody's at 3.5 percent and the South Korean government's 3.0 percent estimate.
It is closer to some of the more bullish projections from major investment banks, including JPMorgan at 3.8 percent, Citi at 3.7 percent and Bank of America at 3.6 percent.
The OECD also raised its forecast for South Korean growth in 2027 to 2.6 percent from 1.9 percent in June.
It said strong exports and production were driving growth this year, with a gradual recovery in consumption expected to continue into next year.
South Korea recorded the largest upward revision among Group of 20 economies in both the OECD's June and September outlooks for 2026. Its 2027 projection also received the biggest upgrade in the latest round, according to the ministry of finance in Seoul.
The ADB's revision pointed in the same direction.
The Manila-based bank raised South Korea's 2026 growth forecast by 0.6 percentage point to 3.2 percent, its second consecutive upward revision after lifting the estimate from 1.9 percent in April.
The 3.2 percent projection is the ADB's highest forecast for South Korea since 2021, when its September outlook projected 4.0 percent growth. Its forecasts for the country between 2022 and 2025 did not exceed 3.0 percent.
The ADB cited stronger-than-expected manufacturing activity in July and August, including firm purchasing managers' and business sentiment indicators.
Exports have benefited from rising global demand for AI-related semiconductor chips, while expansionary fiscal policy and robust corporate earnings are expected to support a gradual recovery in private consumption.
The ADB also raised its 2027 growth forecast for South Korea to 2.3 percent from 2.0 percent.
The two institutions differed more clearly on inflation.
The OECD raised its 2026 inflation forecast for South Korea to 3.0 percent from 2.6 percent in June and lifted its 2027 projection to 2.7 percent from 2.2 percent.
The revisions reflected both the stronger growth outlook and expectations that international energy prices will remain higher than assumed three months earlier.
The ADB, by contrast, kept its 2026 inflation forecast unchanged at 2.7 percent, although it also cited high global energy prices and stronger domestic demand as sources of continuing price pressure.
It expects inflation to ease to 2.2 percent in 2027 as energy-price pressures diminish and tighter monetary conditions work through the economy.
The OECD cited persistent energy-price increases, weather-related supply shocks including El Niño and a further rise in long-term government bond yields as downside risks to the global economy. An earlier end to the Middle East conflict could provide upside.
It also said broader adoption of artificial intelligence could boost investment and production further, while cautioning over profitability at AI-related companies and their reliance on high leverage.
The ADB cited heightened geopolitical tensions, volatility in global financial markets and the possibility of additional U.S. tariff increases as risks that could weaken South Korean exports and investment.
For the global economy, the OECD raised its 2026 growth forecast by 0.1 percentage point to 2.9 percent while trimming its 2027 estimate by the same amount to 3.0 percent. The ADB raised its forecast for developing Asia and the Pacific to 5.0 percent from 4.9 percent and maintained its 2027 projection at 5.1 percent.
AJP Takeaways
-The OECD raised South Korea's 2026 growth forecast by 1.1 percentage points to 3.7 percent, while the ADB lifted its estimate to 3.2 percent, underscoring a broad repricing of the country's growth outlook.
- Both institutions cited strong exports and AI-related semiconductor demand, with the OECD's forecast now above estimates from the BOK, government, KDI and ADB.
- Inflation remains the counterweight to faster growth: the OECD raised its 2026 inflation forecast to 3.0 percent, while the ADB kept its estimate at 2.7 percent amid elevated energy and geopolitical risks.
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