BofA Raises South Korea GDP Forecast to 2.7% on Chip Boom

Bank of America Global Research announced on May 26, 2026, that it has raised its economic growth forecast for South Korea. The bank now projects the nation's Gross Domestic Product will expand by 2.7% in 2024, up from a prior estimate of 2.3%. This 0.4 percentage point revision is directly attributed to a stronger-than-expected recovery in the semiconductor sector, which is driving export revenues.

Context — [why this matters now]

South Korea's economy is heavily dependent on cyclical exports, particularly memory chips produced by giants like Samsung Electronics and SK Hynix. The last major forecast upgrade from a global investment bank occurred in late 2023 when Goldman Sachs lifted its projection to 2.2% on early signs of demand normalization. The current macroeconomic backdrop includes moderating global inflation and market expectations for a Federal Reserve rate cut cycle beginning in late 2024.

The catalyst for this upgrade is a sustained surge in semiconductor export values. After a prolonged downturn in 2022 and 2023, prices for DRAM and NAND flash memory have rebounded sharply due to accelerating demand for high-bandwidth memory in artificial intelligence servers and recovering demand in consumer electronics. South Korea's trade-dependent economy is a direct beneficiary of this global tech cycle upswing, making it a key bellwether for world trade health.

Data — [what the numbers show]

The 2.7% GDP forecast outpaces the Bank of Korea's most recent 2.1% projection and aligns more closely with the International Monetary Fund's global growth outlook. South Korea's exports rose 13.8% year-over-year in April, marking the seventh consecutive month of expansion. Semiconductor exports specifically skyrocketed 56.1% to $9.96 billion, the highest level in nearly two years.

Metric	Previous BofA Forecast (2024)	Revised BofA Forecast (2024)	Change
GDP Growth	2.3%	2.7%	+0.4 pp

The semiconductor sector accounts for approximately 17% of South Korea's total exports. This export revival has contributed to a current account surplus that widened to $6.91 billion in March. For comparison, the MSCI Emerging Markets Index has gained 7% year-to-date, while the Korean Won has appreciated 3.5% against the US dollar in the second quarter.

Analysis — [what it means for markets / sectors / tickers]

The primary beneficiaries of this upgraded economic outlook are domestic semiconductor and technology equities. Samsung Electronics (005930) and SK Hynix (000660) are the most direct plays, with analysts anticipating significant earnings revisions. The Korean won (KRW) is also likely to see continued support from strong capital inflows and trade dynamics. Ancillary sectors like industrial equipment, logistics, and finance should experience a positive ripple effect from increased corporate investment and consumer spending.

A key risk to this optimistic outlook is the concentration of growth in a single sector, leaving the economy vulnerable to any sudden downturn in global tech demand. Geopolitical tensions affecting trade routes or US-China tech policies also present a potential headwind. Institutional flow data indicates increased long positioning in Korean equity ETFs and futures, with particular interest in the technology-heavy Kosdaq index.

Outlook — [what to watch next]

The next critical data point is South Korea’s preliminary second-quarter GDP release, scheduled for July 24, 2024. A figure at or above 0.6% quarter-over-quarter would validate the strength of the current recovery. Markets will also monitor the Bank of Korea's monetary policy meeting on July 11 for any signal that stronger growth could delay potential interest rate cuts.

Key levels to watch include the USD/KRW exchange rate testing support at 1,340 won per dollar. A decisive break below that level could signal further won strength. For the KOSPI index, the 2,800 level represents a major psychological resistance point that a sustained rally may challenge. The trajectory of memory chip contract prices throughout the third quarter will be the ultimate determinant of the forecast's accuracy.

Frequently Asked Questions

What does a higher GDP forecast mean for the average person in South Korea?

Stronger economic growth typically leads to a tighter labor market, which can result in higher wages and increased job security. It also provides the government with more fiscal flexibility, potentially funding social programs or infrastructure projects. However, the benefits may be uneven, with tech sector employees seeing more immediate gains than those in other industries.

How does South Korea's semiconductor industry compare to Taiwan's?

South Korea and Taiwan dominate global semiconductor production, but with different specializations. South Korea leads in memory chips (DRAM and NAND) through Samsung and SK Hynix. Taiwan’s TSMC is the world's largest contract manufacturer of advanced logic chips for companies like Apple and Nvidia. Both economies are highly exposed to the global tech cycle, but their competitive advantages lie in distinct segments of the supply chain.

Has the Bank of Korea indicated it will change interest rates?

The Bank of Korea has maintained a hawkish stance, keeping its base rate at 3.50% to combat household debt and inflation. The stronger growth forecast from BofA reduces the immediate pressure for the central bank to cut rates. Policymakers are likely to wait for clearer signs that inflation is sustainably moving toward their 2% target before considering monetary easing.

Bottom Line

South Korea's upgraded growth trajectory is a direct bet on the enduring strength of the global artificial intelligence and memory chip cycle.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.