AI boom sustains Korea's growth despite global headwinds: IMF official
Summary
South Korea’s economy is weathering global headwinds in Bangkok as the artificial intelligence boom supports growth. IMF Executive Director Choi Ji-young said the IMF raised Korea’s 2026 growth forecast to 3.3 percent, driven by semiconductor exports and AI infrastructure demand. He said AI investment is likely to continue, while warning that a faltering boom could trigger a stock-market correction and other economic disruptions. Choi also expressed support for Korea’s planned Future Fund.
Key Facts
- The IMF’s 3.3 percent growth forecast for Korea in 2026 is 0.7 percentage point higher than its July projection.
- Choi Ji-young said building AI data centers can take around 10 years, indicating that related investment projects are unlikely to lose momentum within a couple of years.
- The IMF warned that a weaker AI boom could adversely affect Korea’s stock market, current account and businesses.
- Choi said the IMF views the structure of Korea’s planned Future Fund positively, although it has not yet completed a detailed assessment.
- The Future Fund is expected to use windfall revenue from the chip supercycle to support long-term growth.
Choi Ji-young, executive director of the International Monetary Fund's Asia and the Pacific Constituency Office, speaks during a meeting with reporters held in Bangkok, Oct. 15. Yonhap
BANGKOK — Korea appears to be weathering global economic headwinds thanks to the artificial intelligence (AI) boom, with the technology investment cycle unlikely to lose steam in the near term, a senior official at the International Monetary Fund (IMF) has said.
"Trade tensions among countries are putting negative pressure on the global economy," Choi Ji-young, executive director of the IMF Asia and the Pacific Constituency Office, said during a meeting with reporters in Bangkok on Thursday, citing the Middle East crisis and the war between Russia and Ukraine as lingering sources of uncertainty.
He was visiting Thailand to attend the 2026 Annual Meetings of the IMF and the World Bank Group.
"Despite these conditions, the growth forecast for South Korea has been revised upward," the director said.
Earlier this week, the IMF raised its growth forecast for Korea in 2026 to 3.3 percent, citing strong semiconductor exports, driven by strong AI infrastructure demand, which more than offset the fallout from the Middle East war.
The figure was up 0.7 percentage point from the organization's July projection.
Choi said AI-related investment will likely continue for some time, citing robust investment in AI data centers and related infrastructure.
"Building AI data centers takes a long time, potentially around 10 years. Investment has only just begun, and these projects are unlikely to falter in a couple of years and make that investment meaningless," he said.
The IMF nevertheless sees significant potential downsides in AI, Choi added.
"South Korea could face a stock market correction, an adjustment in its current account and adverse effects on businesses should the AI boom falter," Choi said. "But within our organization, we expect AI investment to continue for a long time."
The executive director also noted the AI boom has expanded Korea's fiscal room to invest more in future growth, setting the country apart from other nations.
He advised countries experiencing economic growth, such as Korea, not to focus excessively on their debt-to-gross domestic product (GDP) ratios, but instead to prioritize investment in innovation and growth.
"In discussions with IMF staff, we point out that the fund's general policy advice does not fit South Korea's circumstances," Choi noted, adding the fund recognizes the country's unique situation.
"IMF staff share the view that South Korea should continue investing to enhance its growth potential," Choi said.
Turning to the Future Fund, which the government plans to launch next year using so-called windfall revenue from the chip supercycle to lay the groundwork for long-term growth, Choi said the IMF views its structure positively, although it has yet to offer a detailed assessment of the initiative.
Choi Ji-young, right, executive director of the International Monetary Fund's Asia and the Pacific Constituency Office, speaks during a meeting with reporters held in Bangkok, Oct. 15. Yonhap
Choi added the IMF's latest growth forecast for Korea appears not to fully reflect the potential impact of policies aimed at boosting growth, suggesting the projection may be somewhat "conservative."
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