BOK 2026 economic growth forecast: 1.4% growth without IT sector
BOK Governor Rhee Chang-yong projects 1.8% growth for 2026, but warns that excluding IT, growth is only 1.4%. Read more on the FX risks and sector polarization.
The semiconductor boom is masking a harsh reality for the South Korean economy. Bank of Korea (BOK) Governor Rhee Chang-yong warned that without the IT sector's contribution, economic growth would plummet to just 1.4% in 2026. While the headline forecast stands at 1.8%, the deepening divide between tech and traditional industries signals a fragile recovery.
The BOK 2026 economic growth forecast and the 'IT Illusion'
According to Yonhap, Governor Rhee's New Year address highlighted a global semiconductor upcycle as the primary engine for the coming year. However, he was quick to point out that this doesn't constitute a "sustainable or complete" recovery for the nation. In November 2025, the BOK projected a 1.8% expansion for 2026, an acceleration from the previous year's 1%. Yet, the disparity between sectors remains a significant hurdle, necessitating urgent structural reforms to bolster domestic-oriented companies.
Investment Risk: The Korean won hovering at the 1,400 level against the U.S. dollar is increasing inflationary pressure, potentially hurting domestic consumption and small businesses.
FX Market Imbalances and Capital Flight
The won's weakness isn't just a matter of global trends; it's being exacerbated by local investors flocking to overseas securities. Governor Rhee noted that the current 1,400 won exchange rate is significantly out of sync with South Korea's economic fundamentals. To combat this, the BOK is calling for a comprehensive review of capital market institutions to make domestic investments more attractive and stabilize the currency.
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