IMF-based estimates point to two-year rebound in South Korea’s potential growth
In short
Calculations using the IMF’s October outlook put South Korea’s potential growth at 2.14% in 2026 and 2.20% in 2027, up from 1.94% in 2025. Yonhap said this would be the first two-year increase since 1986–1987, though earlier OECD estimates pointed to a decline.
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South Korea’s potential growth rate is estimated to rise in both 2026 and 2027 in calculations based on the International Monetary Fund’s October World Economic Outlook, Yonhap reported on October 18. The figures put the rate at 2.14% this year and 2.20% next year, compared with 1.94% in 2025. Yonhap said applying the same method to historical data would make this the first two-year increase since 1986–1987. [ 1 ]
The estimates were calculated from the IMF’s real gross domestic product and output-gap projections. The IMF forecast real GDP growth of 3.33% in 2026 and 2.83% in 2027, with output gaps of 0.548% and 1.168%, respectively. Potential growth measures how much an economy can sustainably expand without generating excessive inflationary pressure, rather than its actual annual expansion. [ 1 , 3 ]
The reported rebound follows a long decline. Potential growth fell from 4.05% in 2010 to 2.97% in 2018 and 1.28% in 2020 in the series cited by Yonhap. The 2026 estimate would be the highest since 2.23% in 2021. Seoul Economic Daily linked the improvement to semiconductor investment and productivity gains associated with AI adoption, despite constraints on labour supply from ageing. [ 1 , 3 ]
Institutional estimates differ. The OECD’s June figures put potential growth at 1.85% in 2025, 1.66% in 2026 and 1.52% in 2027. By contrast, the National Assembly Budget Office’s outlook published in September projected an increase from 2.14% in 2025 to 2.22% in 2026 and 2.28% in 2027, reflecting stronger GDP forecasts, AI and semiconductor investment and productivity improvements. [ 1 , 3 ]
Yonhap reported differing expert views on whether the strength marks a structural improvement or a favourable short-term cycle. Chosun Ilbo cautioned that benefits concentrated in Samsung Electronics and SK Hynix could widen the gap between headline indicators and conditions felt elsewhere. Maeil Business likewise said the gains might not translate into better conditions for small businesses and low-income households. [ 1 , 2 , 4 ]
Why it matters
Potential growth measures the economy’s sustainable expansion without excessive inflationary pressure. The coverage links the projected improvement to semiconductor investment and AI productivity, while warning that gains may remain concentrated in major exporters.
Key facts
- IMF-based calculations put potential growth at 1.94% in 2025, 2.14% in 2026 and 2.20% in 2027. [ 1 , 3 ]
- Yonhap said two successive annual increases would be the first since 1986–1987. [ 1 ]
- The calculations use IMF real GDP and output-gap projections. [ 1 , 3 ]
- The OECD’s June estimates instead put potential growth at 1.66% in 2026 and 1.52% in 2027. [ 1 , 2 , 3 ]
- The National Assembly Budget Office projected 2.22% in 2026 and 2.28% in 2027. [ 1 , 3 ]
Confirmed by several sources
Still unclear
- Whether the rebound reflects lasting structural improvement and will spread beyond semiconductors. Yonhap reported differing expert views; business outlets cautioned about concentrated gains and weaker conditions elsewhere.