Seoul:The Asian Development Bank (ADB) has increased its 2026 economic growth forecast for South Korea to 3.2 percent, up from the 2.6 percent projected in July. This revision is attributed to strong exports and corporate earnings amid a boom in artificial intelligence (AI).

According to Yonhap News Agency, the ADB's latest estimate represents a 0.6 percentage-point increase from its previous report. The bank also raised its 2027 growth outlook for Asia's fourth-largest economy by 0.3 percentage point to 2.3 percent.

The revised forecast reflects South Korea's growing exports due to soaring global demand for AI chips. Additionally, the country's expansionary fiscal policy and robust corporate earnings are contributing to a gradual recovery in private consumption.

However, the ADB noted potential risks such as rising geopolitical tensions, increased volatility in global financial markets, and additional U.S. tariff hikes, which could negatively impact exports and investment.

Regarding inflation, the ADB maintained its July forecast for South Korea, predicting consumer prices will likely rise 2.7 percent year-on-year in 2026. The government's efforts to curb consumer price increases are expected to partially offset inflationary pressures from higher global energy prices and stronger domestic demand. The inflation forecast for 2027 remains at 2.2 percent.

In July, the Ministry of Finance and Economy revised the country's economic growth projection for 2026 to 3 percent, citing the semiconductor supercycle. In August, the state-run Korea Development Institute (KDI) also updated its forecast, predicting a growth rate of 3.2 percent for 2026, up from 2.5 percent.