Seoul: South Korea's economy is expected to improve this year, driven by a boom in the chip sector, yet persistent discrepancies across industries will remain a concern, a local credit rating agency said Wednesday. "The country's economic growth is set to recover to 1.8 percent this year," Korea Investors Service Inc. (KIS) said in a web seminar on the agency's outlook for Asia's fourth-largest economy.

According to Yonhap News Agency, KIS highlighted that business conditions will vary between industries, and the economy's heavy reliance on a few favorable sectors, particularly semiconductors, will continue. The agency also predicted that South Korea's export growth will slow in 2026, as the impact of U.S. import tariffs begins to take full effect. Despite this, the continued semiconductor boom, the government's monetary easing policy, and a recovery in local demand are expected to remain positive factors for the local economy.

The semiconductor sector, along with the defense and shipbuilding industries, is likely to enjoy positive prospects this year, according to KIS. However, the petrochemical, construction, and retail sectors, as well as the steel, duty-free retail, and secondary battery sectors, may face challenges. On the currency front, the rating agency expects the won to remain weak against the U.S. dollar throughout the year.