Seoul, Dec 26 With global economic uncertainties widely expected to continue weighing down Asia's fourth-largest economy in 2026, South Korea will seek to weather the challenges by leveraging its semiconductor industry amid the global artificial intelligence (AI) boom, experts said on Friday.
The South Korean economy faced significant jitters earlier this year after U.S. President Donald Trump announced a series of protectionism measures, including tariffs targeting long-standing economic allies, reports Yonhap news agency.
After a series of negotiations, Seoul and Washington in November released a fact sheet that codified the U.S. agreement to lower its reciprocal tariffs on South Korean products to 15 percent from 25 percent in return for Seoul's commitment to invest US$350 billion in the United States and other pledges.
Taking such progress into account, the Bank of Korea revised up its 2026 growth outlook to 1.8 percent from the earlier projection of 1.6 percent, also citing a strong upturn in the global semiconductor industry.
The ASEAN+3 Macroeconomic Research Office (AMRO) projected South Korea's economy to expand 1.9 percent next year on the back of solid exports.
South Korea's exports increased 8.4 percent from a year earlier in November to over $61 billion, marking the sixth consecutive month of increase.
Accumulated exports in the January–November period reached $640.2 billion, a record high for the first 11 months of a year, raising expectations that the country's annual exports will surpass the $700 billion mark for the first time in its history this year.
Despite the upbeat outlook and data, experts said South Korea faces broad challenges, including foreign exchange volatility, intensifying competition in major industries, particularly from Chinese rivals, and slowing growth in domestic sectors.
"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," Joo Won, an economist at Hyundai Research Institute, told Yonhap News Agency.
The economist noted South Korea's construction industry, which accounts for more than 10 percent of its gross domestic product (GDP), is expected to continue weighing down the overall economy.
Touching on the weak Korean won, Joo said the situation is expected to gradually improve down the road, although the U.S. dollar will still remain strong in the first quarter of 2026.
The won was quoted at 1,483.6 won per dollar Tuesday, nearing its weakest level since April 9, when it closed at 1,484.1 won. The April figure marked the lowest level since March 12, 2009.
"In the first quarter, (the foreign exchange market) will remain unstable," Joo said, noting many foreign companies based in South Korea send money back to their home countries in March or April following the end of the fiscal year. "But it will stabilize starting in the second quarter."
Choe
"Domestic demand remains weak, and inflation is unstable," Choe told Yonhap News Agency. "This cannot be addressed with short-term measures, and the government needs to make efforts to improve overall productivity under a longer-term vision."
Choe said South Korea can nevertheless leverage the global AI boom and expand investment in the sector.
Park Jea-gun, a distinguished professor of electronic engineering at Hanyang University, said South Korea's semiconductor industry is set to remain strong throughout 2026 on the back of solid demand for premium chips, including high bandwidth memory (HBM), from the AI sector.
"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 Yonhap news agency.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor