S. Korea likely to continue solid growth driven by robust chip exports

Bu Kim Boram

SEOUL, Oct. 12 (Yonhap) -- The South Korean economy is expected to continue solid growth for the time being as robust semiconductor exports spill over into the broader economy, the central bank said Monday.

"The domestic economy is expected to see a significant increase in its growth rate this year, driven by strong semiconductor exports, and it will maintain steady growth next year as well," the Bank of Korea (BOK) said in a report submitted to the National Assembly.

"As the semiconductor sector continues to expand, the positive impact of improving income conditions is expected to spread to domestic demand as a whole, including consumer spending, leading to a favorable growth trend."

The BOK raised its growth forecast to 3.3 percent for 2026 and 2.9 percent for 2027, saying the semiconductor upcycle continues and the gains are spilling over into the broader economy.

The country's gross domestic income (GDI), which measures the total income generated and costs incurred by all sectors within an economy, grew 13.2 percent in the first quarter of this year and 15.7 percent in the second quarter, compared with 3.5 percent in the fourth quarter of 2025.

Amid strong economic conditions, the central bank lifted the benchmark interest rate to 3 percent over two consecutive meetings in July and August, citing "preemptive" action to prevent inflationary pressures from accelerating further.

The BOK said consumer prices are expected to remain above the 2 percent target as strong exports and investment support household incomes.

In particular, core inflation, which excludes volatile energy and food prices, rose nearly 3 percent in recent months due to supply chain disruptions stemming from the prolonged Middle East crisis.

"We plan to closely monitor inflation and economic trends, as well as financial stability, and determine the timing and pace of additional rate hikes," the BOK said.

The BOK will hold its next rate-setting meeting on Oct. 22.

brk@yna.co.kr
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