Korea Viewpoint: Robust tech cycle momentum to fuel above-trend growth in 2026

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Korea Viewpoint: Robust tech cycle momentum to fuel above-trend growth in 2026

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Korea Viewpoint

Robust tech cycle momentum to fuel

above-trend growth in 2026

AI cycle drives above 3% GDP growth reset 26 May 2026 Corrected

We increase 2026 GDP growth to 3.1% yoy (from our early-April projection of 1.9% yoy), GEM Economics

marking a clear shift to above-trend expansion. We also see a further improvement in Asia | Korea

current account surplus to 15% of GDP this year. The upgrade is driven by a powerful Benson Wu, CFA

semiconductor upcycle, with DRAM prices projection lifted by another 48% yoy in 2026. China & Korea Economist

Year-to-date, export growth has accelerated to 41% yoy, with semiconductors Merrill+852 3508Lynch5047(Hong Kong)

contributing 36ppt, anchoring a sustained external impulse. We expect net exports to benson.wu@bofa.com

contribute GDP growth by 1.3ppt in both 2026 and 2027 (Exhibit 13). Ting Him Ho, CFA

Asia Economist

Strong spillovers reinforce domestic recovery Merrill+852 3508Lynch8744(Hong Kong)

tinghim.ho@bofa.com

We also expect spillovers to broaden beyond exports. On the investment side, facility

investment is likely to rebound to 3.6% yoy, supported by a sharp pickup in

semiconductor capex: investment by the two major chipmakers is set to rise 41.9% yoy Abbreviations:

in 2026, underpinning a more durable investment cycle. Construction investment also

appears to past the trough. On consumption, further normalization is underway. Retail DRAM: Dynamic Random-Access

sales rose 7.3% yoy in March, with department store sales up 10.5% yoy, pointing to Memory

early signs of stronger equity-driven wealth effects. As a result, we expect private

HBM: High Bandwidth Memoryconsumption growth to accelerate to 2.2% in 2026, from 1.3% in 2025.