Korea to undergo sweeping AI integration for economic breakthrough

Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol, center, speaks during a joint briefing with other relevant ministers on new economic policy objectives at Government Complex Seoul, Friday. Yonhap

Korea will aggressively adopt artificial intelligence (AI) through 15 flagship projects spanning both public and private sectors, in a bid to help revitalize the sagging economy, the government said Friday.

Private enterprises will lead the AI-driven transition in seven of the 15 projects — robotics, automobiles, shipbuilding, home appliances, drones, factory operations and semiconductors. The remaining eight projects will be led by the public sector, focusing on areas such as welfare, employment, taxation, clinical testing, talent development at home and abroad, public data sharing and research and development (R&D).

The government said it chose AI integration as the centerpiece of the first economic policy initiative unveiled since President Lee Jae Myung took office on June 4, viewing it as the only viable path to reverse Korea’s accelerating economic decline.

“The Korean economy may lose everything it has achieved over the past decades if we do not move quickly to pioneer an economic transition,” Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol said in a joint briefing with other relevant ministers at Government Complex Seoul, Friday.

Koo pointed to a long-term decline in Korea’s growth potential, which hovered around 3 percent throughout the 2010s, but is estimated to decline to the upper 1 percent range by 2025, fall further to the lower 1 percent range in the 2030s and dip below 1 percent in the 2040s.

The downward trend has accelerated in recent years due to a combination of internal and external risks, including population decline, unbalanced regional development, growing polarization, the unraveling of the U.S.-led global trade order and China’s rapid technological improvements.

Accordingly, the ministry halved the country’s 2025 GDP growth outlook to 0.9 percent, Friday, down from the previous forecast of 1.8 percent.

“Under these circumstances, the era of AI-driven grand transformation presents our economy with a golden opportunity — and perhaps the final critical moment — to leap forward as a globally leading nation,” Koo added.

The government projects that successful AI integration could increase GDP growth by between 4.2 percent and 12.6 percent over time.

Meanwhile, the 15 AI-centered projects will be part of a broader innovative economic roadmap that also aims to boost cutting-edge technologies, accelerate the green transition and expand the global popularity of Korean culture.

The overall plan will comprise a total of 30 projects, encompassing sectors such as liquefied natural gas cargo tanks, solar energy, wind energy, smart farming, high-resolution satellites, biotechnology, webtoons, cosmetics and food.

“We will simultaneously advance AI alongside other technological innovations to maximize outcomes,” Koo said.

5 regional hubs

The 30 projects will be launched in the second half of the year to effectively address both economic and social challenges.

To promote balanced regional development, the projects will be distributed across five regions outside the Seoul metropolitan area. Busan will focus on automobiles and shipbuilding, while Gwangju will concentrate on renewable energy and food. Daegu will specialize in robotics and biotechnology and Daejeon will focus on semiconductors. Gangwon and Jeju will together leverage their strengths in green energy and tourism.

As for AI talent, the government will aim to attract up to 2,000 engineers from abroad with eased visa rules, while offering incentives to competent engineers here to prevent brain drain.

To integrate AI into everyday life, the government will support the application of AI to 300 widely used products in sectors such as manufacturing, housing and logistics through the AX-Sprint 300 program.

A fund worth 100 trillion won ($71.5 billion) will be raised with 50 trillion won set aside to nurture high-end industries and other future growth engines. The other 50 trillion won will be allocated to programs to improve public livelihood, such as low-interest loans, and to support small and medium-sized enterprises (SMEs).

The government will further assist SMEs in adopting AI-based smart factories to enhance production cost-efficiency and scale up their manufacturing capacity.

To enhance the competitiveness of small business owners, the government will provide AI-assisted business district analysis and management diagnostic information.

In order to minimize adverse impacts during the AI transition, educational sessions will be open to help citizens who face difficulties using AI and digital technologies.

With regards to the green transition, a special law will be enacted to establish a new industrial cluster dedicated to RE100, a global initiative in which businesses commit to sourcing 100 percent of their electricity from renewable energy sources. The law will include measures to provide incentives such as regulatory easing and reductions in procurement costs.

Concerning other economic strategies, the government said it will shift the flow of funds from real estate to stock and other financial markets.

It also vowed to improve corporate governance and establish market order by strictly cracking down on unfair trading, and prepare an MSCI inclusion roadmap within this year.