South Korea’s economy is growing at its fastest clip in half a decade, and the Bank of Korea isn’t entirely sure that’s a good thing.
The central bank held its benchmark interest rate steady at 2.50% on May 28, marking the eighth consecutive meeting without a change. But the real story was in the revised forecasts: the BOK upgraded its 2026 growth projection to 2.6%, up from 2.0%, while simultaneously bumping its inflation forecast to 2.7% from 2.2%.
Chips are driving everything
The engine behind this growth surge is semiconductors, specifically the ones powering AI infrastructure worldwide. Samsung Electronics and SK Hynix, two of the planet’s most important chipmakers, are riding a wave of global demand that shows few signs of slowing down.
First-quarter 2026 GDP expanded by 1.7%, the strongest quarterly performance South Korea has posted in over five years. April 2026 inflation came in at 2.6% year-over-year, the highest reading since mid-2024.
