South Korea: In 2026, will use semiconductors and AI to accelerate economic development

South Korea:  Seoul According to analysts on Friday, South Korea will strive to weather the hurdles by using its semiconductor sector amid the global artificial intelligence (AI) boom, as it is generally anticipated that global economic concerns would continue to burden Asia’s fourth-largest economy in 2026.

According to Yonhap news agency, U.S. President Donald Trump’s announcement of a number of protectionist measures earlier this year, including tariffs aimed at long-standing economic partners, caused considerable anxiety in the South Korean economy.

Following a number of discussions, Seoul and Washington published a fact sheet in November that formalized the U.S. agreement to reduce its reciprocal tariffs on South Korean goods from 25 percent to 15 percent in exchange for Seoul’s pledge to invest US$350 billion in the US and other commitments.

In light of these developments, the Bank of Korea increased its forecast for 2026 growth from 1.6 percent to 1.8 percent, pointing to a robust rebound in the global semiconductor sector.

Based on strong exports, the ASEAN+3 Macroeconomic Research Office (AMRO) predicted that South Korea’s GDP will grow by 1.9 percent the next year.

Exports from South Korea rose 8.4% year over year to over $61 billion in November, the sixth consecutive month of growth.

Exports from January to November totaled $640.2 billion, a record for the first 11 months of a year. This raises hopes that the nation’s yearly exports would cross $700 billion for the first time in its history this year.

Experts added that despite the positive outlook and statistics, South Korea still confronts a number of issues, such as unstable foreign currency, increased competition in key industries, especially from Chinese competitors, and slower development in its own sectors.

Joo Won, an economist at Hyundai Research Institute, told Yonhap News Agency, “It is likely South Korea will achieve economic growth of 1.8 percent, not because the situation will improve next year, but because conditions were extremely challenging this year.”

According to the analyst, South Korea’s construction sector, which contributes over 10% of its GDP, is predicted to keep hurting the country’s economy as a whole.

Regarding the weak Korean won, Joo said that although the U.S. dollar would still be strong in the first quarter of 2026, things should progressively improve in the future.

The won was trading at 1,483.6 won to the dollar on Tuesday, getting close to its lowest level since it ended at 1,484.1 won on April 9. The April number was the lowest since March 12, 2009.

Joo said, “The foreign exchange market will remain unstable in the first quarter,” pointing out that many international businesses with South Korean headquarters transfer money home in March or April after the fiscal year ends. “But it will stabilize starting in the second quarter.”

Choe

Choe told Yonhap News Agency, “Inflation is unstable and domestic demand is still weak.” “This cannot be addressed with short-term measures, and the government needs to make efforts to improve overall productivity under a longer-term vision.”

However, South Korea can take advantage of the global AI growth and increase investment in the field, according to Choe.

According to Park Jea-gun, a prominent professor of electrical engineering at Hanyang University, the AI industry’s strong demand for premium chips, especially high bandwidth memory (HBM), would sustain South Korea’s semiconductor industry until 2026.

“In early 2024, some anticipated a downcycle in the memory sector, but there has been an abrupt surge in demand from the AI segment,” Park told the news outlet Yonhap.