KDI South Korea Economic Outlook 2026: Chip Boom Meets Construction Crisis

11 straight months of export growth. Yet, South Korea's construction sites remain eerily quiet. The Korea Development Institute (KDI), a state-run think tank, released its latest assessment on Thursday, revealing a dual-track economy where surging semiconductor production masks deep-seated pain in the real estate and retail sectors.

Export Dominance: KDI South Korea Economic Outlook 2026 Highlights

South Korea's export engine is firing on all cylinders. In December, exports climbed 13.4% year-on-year to hit $69.6 billion. Industrial production overall rose 0.9% in November, primarily buoyed by the global chip supercycle. However, the KDI warns that much of this value growth stems from unit price surges rather than a broad-based volume increase across all manufacturing sectors.

Construction Slump and Private Consumption Wobbles

While the global tech sector demands more chips, domestic demand in South Korea is struggling. Construction investment is in a freefall, with output dropping 17% in November following a staggering 24.8% plunge the month prior. Even retail sales—a critical gauge of consumption—dipped by 3.3%, marking the steepest decline in nearly two years. This volatility suggests that your wallet might feel lighter despite the record-breaking export headlines.