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over Story Korean Economic Outlook for the Second Half of 2026

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  • Sung Wook Hong

    (Korea Institute for Industrial Economics and Trade)

Abstract

South Korea’s economy is projected to grow by 2.5 percent in 2026, supported by strengthening domestic demand and robust export growth led by semiconductors and other ICT products. While elevated energy prices and geopolitical uncertainty continue to weigh on growth prospects, expansionary fiscal policy and sustained investment in artificial intelligence-related industries are expected to support economic activity. Private consumption is projected to recover gradually, while facility investment remains supported by strong capital expenditure in high-technology industries. Construction investment is expected to return to positive growth, aided by more construction orders and expanded spending on public infrastructure. Exports are expected to remain the principal driver of growth, reflecting strong global demand for semiconductors and ICT products. However, export performance is likely to remain uneven across industries amid trade policy uncertainties and intensifying global competition. The balance of risks remains tilted to the downside, reflecting continued developments in the Middle East, energy prices, global trade conditions, and the sustainability of AI-related investment.

Suggested Citation

  • Sung Wook Hong, 2026. "over Story Korean Economic Outlook for the Second Half of 2026," Industrial Economic Review 023552, Korea Institute for Industrial Economics and Trade.
    • Handle: RePEc:ris:kieter:023552
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