OECD Raises South Korea’s 2026 Growth Forecast to 3.7%, Biggest Upgrade Among G20 Economies

South Korea is the only country to get a revision of more than 1 percentage point

"Semiconductor supercycle" to sustain growth

The Organization for Economic Cooperation and Development raised its forecast for South Korea’s economic growth this year by 1.1 percentage points to 3.7%, marking the largest upward revision among Group of 20 economies. The 3.7% projection is also the highest among major forecasts from domestic and international institutions, including the government, the Bank of Korea, the Korea Development Institute and the Asian Development Bank.

In its interim economic outlook released on Sept. 23, the OECD raised its projection for South Korea’s real economic growth in 2026 to 3.7% from 2.6%. South Korea was the only country whose forecast was lifted by more than 1 percentage point. India had the second-largest increase at 0.8 percentage point. The OECD raised its forecasts for Japan and the US by 0.2 percentage point each, to 0.8% and 2.2%, respectively. If the OECD projection is realized, South Korea’s growth rate would exceed that of the US for the first time since 2022.

The OECD forecasts South Korea’s growth at 2.6% next year. It sees consumer inflation at 3.0% this year and 2.7% next year. A Finance Ministry official said the OECD judged that strong growth in exports and output would drive South Korea’s economy this year, while a moderate recovery in consumption would continue next year.

South Korea’s growth upgrade is the biggest in the G20; on pace to overtake the US for the first time in four years

Next year’s forecast raised sharply to 2.6% from 1.9%

The OECD releases its full global economic outlook twice a year, in June and December, and revises those projections through interim reports in March and September. Its forecast for South Korea’s growth was raised from 1.7% in March to 2.6% in June, and then to 3.7% this month, a cumulative 2 percentage-point increase in six months. After June, South Korea again posted the biggest upward revision among G20 economies in September.

The OECD’s 2026 forecast for South Korea is nearly four times the euro area’s 1.0%. Excluding emerging economies such as India at 7.1%, Indonesia at 5.2% and China at 4.5%, South Korea has the highest forecast in the G20. In its June outlook, the OECD said growth could come in above forecast if demand for advanced semiconductors strengthened. That upside factor has now materialized.

For next year, the OECD forecasts South Korea’s growth at 2.6%, up 0.7 percentage point from its June projection of 1.9%. That was also the largest upward revision in the G20. It now sees inflation this year at 3.0%, up 0.4 percentage point from its June estimate of 2.6%. The ministry official said the 3.7% forecast appeared to reflect recent indicators, including South Korea’s 3.8% real growth in the first half. The higher inflation outlook also reflects the sharp upward revision to growth and higher international energy prices than in June.

The South Korean government projected 3.0% growth this year in its second-half economic policy strategy released in July. Last month, the Bank of Korea and the Korea Development Institute forecast growth of 3.3% and 3.2%, respectively. The Asian Development Bank, which released its Asia economic outlook on Sept. 23, put South Korea’s growth at 3.2%, broadly in line with domestic institutions. That was 0.6 percentage point higher than its July forecast of 2.6%.

The ADB said it reflected rising exports driven by growing global demand for artificial intelligence semiconductors. It added that private consumption would recover moderately, supported by expansionary fiscal policy and solid corporate earnings. It also said geopolitical tensions, volatility in global financial markets and the risk of further US tariff increases curbing exports and investment remain key downside risks.

Nam Jung-min, Hankyung.com reporter

peux@hankyung.com