SEOUL, 28th May, 2026 (WAM) (Yonhap) -- The central bank on Thursday raised its economic growth forecast for South Korea to 2.6% for 2026 amid solid exports driven by a semiconductor super cycle.

The revision by the Bank of Korea (BOK) represents a 0.6 percentage-point increase from its previous forecast of 2% issued in February.

''The Korean economy is projected to expand by 2.6% this year, well above the February forecast of 2%, driven by robust semiconductor exports, while government measures, including the supplementary budget, partially offset the Middle East-driven supply shock," the BOK said in a release.

It is the largest upside revision since May 2021, when the BOK raised its growth projection by 1 percentage point from 3% to 4%.

For 2027, the central bank estimated its growth outlook at 2.1%.

The South Korean economy grew 1.7% in the first quarter, marking the sharpest quarterly growth in 5 1/2 years.

The revised outlook broadly aligned with forecasts from other institutions.

The International Monetary Fund (IMF) projected growth of 1.9% this year, while the Asian Development Bank (ADB) projected 1.9% growth.

The Korea Development Institute (KDI) earlier improved its growth forecast to 2.5% for 2026 from 1.9 percent.

The BOK also revised up its inflation prediction to 2.7% from 2.2%, citing higher international oil prices in the aftermath of the U.S.-Iran war.

For 2027, consumer prices are estimated to rise 2.3%, according to the BOK.

The central bank presented an optimistic scenario in which semiconductor-driven exports gain further momentum, raising its growth forecast by 0.5 percentage point for 2026 and 0.3 percentage point for 2027.

Under a pessimistic scenario, however, a possible slowdown in artificial intelligence investments would lower economic growth by 0.3 percentage point this year and 0.2 percentage point next year, the central bank said