AJP Factbox: Korea's growth potential gains AI traction

South Korea's potential growth outlook is becoming less clear-cut as the AI and semiconductor boom boosts investment and raises hopes of stronger productivity. OECD estimates point to a decline from 1.85 percent in 2025 to 1.52 percent in 2027, while calculations based on the IMF's latest GDP and output-gap forecasts imply a rise from 1.94 percent to 2.20 percent over the same period.

Whether the improvement lasts will depend on how widely the gains spread. IMF research suggests broader AI adoption and more efficient allocation of labor and capital could offset a significant part of the drag from population aging, while the Bank of Korea says lasting gains will require higher productivity beyond the semiconductor sector. Its year-end reassessment of potential growth will offer an important test of whether the current boom is cyclical or structural.

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