IMF Raises South Korea 2026 Growth Forecast to 2.6%, Highest Among Advanced Economies

The International Monetary Fund raised its forecast for South Korea’s economic growth this year to 2.6% from 1.9%, a 0.7 percentage-point increase. Alongside Iran, South Korea posted the largest upward revision among 30 major economies. The IMF also lifted its forecast for next year to 2.5% from 2.1%.

In its July World Economic Outlook released on July 8, the IMF projected that South Korea’s growth this year and next year would be the highest among advanced economies, the Ministry of Economy and Finance said.

The IMF identified South Korea as one of the world’s four largest net exporters of artificial intelligence hardware. Despite the country’s heavy dependence on Middle Eastern energy, strong semiconductor and AI hardware exports helped first-quarter growth reach an annualized 7.5%, well above the IMF’s April forecast of 1.8%.

The latest outlook aligns with recent upgrades from other institutions. The Bank of Korea and the Organization for Economic Cooperation and Development both forecast South Korea’s economy will grow 2.6% this year, while the Korea Development Institute projects 2.5%.

The ministry said the upgrades for both this year and next year show that growth momentum driven by semiconductors and AI could continue into next year.

The IMF lowered its forecast for global growth this year by 0.1 percentage point to 3.0%. It raised next year’s outlook by 0.2 percentage point to 3.4%.

Growth in advanced economies this year was cut by 0.1 percentage point to 1.7%. The US was left unchanged at 2.3%. The euro area was revised down to 0.9%, and Japan to 0.6%. The outlook for emerging market and developing economies was lowered by 0.1 percentage point to 3.8%. China’s forecast was raised to 4.6%, while India’s was cut to 6.4%.

Global inflation is forecast at 4.7% this year due to rising energy and food prices, the IMF said. The fund cited Middle East tensions and trade fragmentation as the main downside risks to the global economy, and called for price stability, targeted fiscal support for vulnerable groups, and structural reforms to strengthen energy security and capacity to respond to AI.

Han Kyung-woo, Hankyung.com reporter, case@hankyung.com