Seoul: The Bank of Korea (BOK) raised its economic growth forecast for South Korea, projecting a 2.6 percent increase for 2026, up from its previous estimate. This adjustment comes as the nation experiences strong export activity fueled by a semiconductor supercycle.

According to Yonhap News Agency, the central bank's revision marks a 0.6 percentage-point increase from the earlier forecast of 2 percent set in February. For 2027, the BOK predicts a growth rate of 2.1 percent. The South Korean economy expanded by 1.7 percent in the first quarter, achieving the highest quarterly growth in over five years. This updated outlook is consistent with predictions from other financial institutions.

The International Monetary Fund (IMF) and the Asian Development Bank (ADB) both foresee a growth rate of 1.9 percent for the current year. Meanwhile, the Korea Development Institute (KDI) has also adjusted its forecast for 2026, raising it to 2.5 percent from 1.9 percent.

In addition to growth projections, the BOK revised its inflation forecast to 2.7 percent, up from 2.2 percent, attributing the increase to rising international oil prices following the U.S.-Iran conflict. For 2027, consumer prices are expected to rise by 2.3 percent.

Reflecting the positive economic outlook, the BOK maintained the key interest rate at 2.5 percent, with indications of a potential rate hike in the latter half of the year.