Bank of America Raises South Korea Growth Outlook
Bank of America has increased its 2027 economic growth forecast for South Korea to 2.2% from 2.0%, attributing the upgrade to an AI‑driven semiconductor upcycle that is bolstering both growth momentum and the nation’s external balance. The bank retains its 2026 GDP growth projection at 3.1% year‑over‑year, a level that was revised upward in late May.
The outlook is underpinned by three factors: accelerating demand and pricing for AI‑related chips, a de‑escalation of tensions in the Middle East, and a more hawkish stance by the U.S. Federal Reserve under Chair Warsh.
Bank of America now expects the current‑account surplus to reach 16.1% of GDP in 2026 and 16.8% of GDP in 2027. It has lowered its 2026 consumer‑price‑index (CPI) inflation estimate to 2.6% from 2.7%, while raising the 2027 CPI forecast to 2.2% from 2.0%.
Regarding monetary policy, the bank anticipates three Bank of Korea rate hikes—projected for July, October and January—pushing the terminal policy rate to 3.25% by early 2027.
Domestic demand signals include a sharp rise in high‑end consumption: department‑store sales in May were up 24.5% year‑over‑year, far outpacing overall retail growth of 9%, reflecting a wealth effect from the equity rally and tourism rebound.
On the foreign‑exchange front, the bank’s FX strategist has lifted the year‑end USD/KRW forecast to 1,560, considerably above current forward market pricing.
All figures are drawn from the Bank of America report dated 25 June 2026.