SEOUL, November 10 (AJP) — South Korea's economy is forecast to grow 3.1 percent in 2027, sustaining chip-led growth above 3 percent for a second straight year a think tank said Tuesday.
The Korea Institute of Finance (KIF) expects growth to slow from its estimated 3.8 percent this year as exports moderate from a high base, while chip demand, investment and fiscal spending support activity.
Real exports of goods and services are forecast to rise 5.2 percent next year, down from 9.9 percent this year, rather than contract.
Private consumption growth is expected to accelerate to 2.3 percent from 2.0 percent, while facility investment growth slows to 5.4 percent from 7.9 percent.
But the institute warned that the semiconductor industry's capital-intensive structure limits how widely its gains spread across the economy.
Semiconductor production generated 2.4 jobs per 1 billion won (about $740,000) of output in 2023, compared with an economy-wide average of 8.2, its analysis showed.
Higher chip output benefited other manufacturers, but its impact on service-sector production was not statistically significant.
The robust chip earnings, production investment and tax revenue are expected to produce larger domestic spillovers than in earlier cycles, including higher household spending, it said.
Employment gains are forecast to rise modestly to 180,000 jobs next year from 140,000 this year, aided by consumption, construction and government job programs.
Self-employed businesses face mounting costs and financial strain, with the share of financially vulnerable borrowers reaching 12.8 percent in early 2026 from 10.0 percent in late 2021.
Their share of outstanding self-employed loans rose to 10.7 percent from 8.0 percent over the same period, according to central bank figures cited by KIF.
Consumer price inflation is projected to ease to 2.4 percent from 2.7 percent, remaining above the Bank of Korea's 2 percent target.
The average yield on three-year government bonds is expected to rise to 4.1 percent in 2027 from 3.7 percent this year amid inflation pressures and expectations of further monetary tightening.
The current account surplus is forecast to widen to $563 billion from $452 billion, though KIF cautioned that export gains have relied heavily on higher semiconductor prices.
Slower global artificial intelligence infrastructure investment, renewed geopolitical tensions and intensifying Chinese competition in non-chip exports pose risks to the outlook.
The institute urged policymakers to diversify industry and avoid permanent spending commitments funded by volatile chip-related tax revenue while supporting indebted households and small businesses.
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