Seoul: Major global investment banks have increased their forecasts for South Korea's economic growth due to a strong semiconductor upcycle, while also highlighting concerns over an uneven "K-shaped recovery."

According to Yonhap News Agency, the Korea Center for International Finance (KCIF) reported that the median growth forecast by major foreign institutions for 2026 was raised to 2.0 percent in January, up from 1.8 percent in early November. This adjustment reflects confidence in the global semiconductor cycle's strength and resilience.

Goldman Sachs revised its growth outlook from 1.8 percent to 1.9 percent, and UBS increased its forecast by 0.2 percentage points to 2.2 percent. Despite these positive revisions, the investment banks warned of a "K-shaped" recovery in South Korea, marked by a thriving technology sector and a struggling non-tech industry.

Citi and Goldman Sachs identified ongoing challenges for non-tech industries, which are affected by U.S. tariff-related issues and slowing global demand, in contrast to the robust performance of tech exports. Goldman Sachs also noted that sectors such as steel, petrochemicals, consumer electronics, and electric vehicles are experiencing declining profitability due to chronic oversupply, impacting overall export growth.

HSBC observed that business sentiment among small and mid-sized companies remains below the long-term average, as highlighted in the report.