Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il projected that South Korea's economic growth rate could reach the mid-3% range this year, provided there are no external shocks or unexpected variables. This optimism is based on strong export performance, particularly in semiconductors, and favorable trends in facility investment. The government is also considering increasing the frequency of economic forecasts starting next year to better respond to rapidly changing economic conditions.
During a press briefing on October 16 in Bangkok, Thailand, Lee stated, "If no significant external events occur in the remaining period, I believe reaching the mid-3% range is possible."
The government had previously set the growth rate forecast at 3.0% in its '2026 Second Half Economic Growth Strategy' announced on July 14. The International Monetary Fund (IMF) raised its forecast for South Korea's growth rate to 3.3% in its October World Economic Outlook, an increase of 0.7 percentage points from its July estimate.
Lee also mentioned the possibility of exceeding the IMF's forecast, noting, "The third quarter appears to be performing well, and if that continues, we believe it will surpass the current IMF estimate of 3.3%."
The positive outlook for growth is supported by favorable assessments of exports and facility investment. According to the Bank of Korea, the real gross domestic product (GDP) grew by 1.8% in the first quarter and by 0.6% in the second quarter. Lee indicated that exports and facility investments continue to show strong trends in the third quarter.
Lee also suggested that the potential growth rate may stop declining and could rebound. He explained that increased facility investment, particularly in semiconductors, could lead to productivity improvements, thereby enhancing the economy's fundamental strength. He stated, "Given the recent growth trends and composition, I believe the potential growth rate can rebound from its declining trend, and that time is approaching, if not imminent."
South Korea's potential growth rate has been on a downward trend. According to the OECD's June 2026 forecast, it is expected to decrease from 1.85% in 2025 to 1.66% in 2026 and 1.52% in 2027.
However, recent analyses reflecting the semiconductor boom and increased investments in artificial intelligence (AI) suggest a potential rebound. The IMF's October World Economic Outlook estimates that South Korea's potential growth rate will rise from 1.94% last year to 2.14% this year and 2.20% next year, based on calculations derived from the projected real GDP growth rate and GDP gap rate.
Lee announced plans to expand the frequency of economic forecasts. Currently, the government releases economic forecasts twice a year, at the end of the year and around late June to early July. Starting next year, it is considering adding two additional updates to the annual forecast.
He remarked, "Given how rapidly the economy is moving, we are questioning whether two forecasts a year are sufficient at this point. I believe we need to provide forecasts more frequently starting next year." He added, "At the end of the year, we will naturally need to assess the next year's economy, and then we should consider making additional updates not just once, but possibly twice, to respond to the rapidly changing economy."
With an increase in the frequency of economic forecasts, there may be less need to prepare separate comprehensive strategies for the second half of the year. Instead of launching large-scale measures each time forecasts are revised, the government aims to accurately diagnose economic conditions and develop tailored responses for necessary areas.
Lee explained, "Rather than undertaking another large-scale operation, it seems more appropriate to make our economic forecasts more accurate and respond to areas that require additional support within those forecasts." He concluded, "If our current thinking remains unchanged until the end of the year, it may be difficult to see a separate economic growth strategy for the second half next year."
* This article has been translated by AI.
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