The International Monetary Fund (IMF) named South Korea as one of the countries receiving the steepest upward growth revisions in the world this year. The IMF judges that semiconductor exports riding the artificial intelligence (AI) boom will overwhelm the oil price shock, even as the Middle East war intensifies downward pressure on the global economy. With the opposing forces of a war-driven supply shock and the AI technology cycle dividing the global economy, Korea stands firmly on the beneficiary side.
In its July World Economic Outlook Update released on July 8, the IMF projected Korea's real gross domestic product (GDP) growth at 2.6% for this year. The figure is 0.7 percentage points higher than its April forecast of 1.9%, the largest upgrade — alongside Iran — among the 30 major economies covered in the revision. The forecast for next year was also raised 0.4 percentage points, from 2.1% to 2.5%. In both years, Korea ranks first among the 11 advanced economies included in the release.
By contrast, the picture for the global economy overall darkened. The IMF lowered its global growth forecast for this year to 3.0%, down 0.1 percentage point from April. Advanced economies were cut from 1.8% to 1.7% and emerging and developing economies from 3.9% to 3.8%, while the eurozone (1.1% to 0.9%) and Japan (0.7% to 0.6%) were also lowered. The Middle East and Central Asia, whose crude oil exports were hit by the Middle East war, was slashed from 1.9% to 0.7%, and Saudi Arabia from 3.1% to 1.7%.
The IMF sees two opposing forces — the Middle East supply shock and the AI-led technology cycle — shaping each country's growth path, with outcomes diverging depending on exposure to the Middle East war and integration into the AI value chain. Korea is exposed to Middle East risk given its heavy reliance on crude oil and gas imports. But the country was named — alongside Taiwan, Thailand and Malaysia — among the "top four net exporters of AI hardware," and the IMF assessed that the boost from semiconductor and AI exports will far outweigh energy-related headwinds.
First-quarter results were cited as grounds for this judgment. According to the IMF, Korea's growth in the first quarter of this year reached 7.5% on an annualized basis (a figure converted on the assumption that the quarterly pace continues for a full year), far exceeding the 1.8% expected at the time of the April forecast. "The simultaneous upward revision of next year's growth outlook along with this year's suggests the possibility that Korea's semiconductor- and AI-related growth momentum will continue into next year," the Ministry of Finance and Economy said.
Still, voices cautioning against optimism also emerged. The IMF diagnosed that global economic risks are more balanced than in April but that downside factors still dominate. It warned of uncertainty in the Middle East, trade fragmentation and weakening policy space in some countries, and noted that AI, too, could dampen consumption and financial markets if expectations falter.
