IMF Lifts South Korea's 2026 Growth Forecast on Chip Demand, China Outlook Upgraded

The International Monetary Fund raised its 2026 growth forecasts for South Korea and China, citing strong external demand for semiconductors and rebalancing in the Chinese economy, even as the fallout from the Middle East war continues to weigh on the region. In its July World Economic Outlook update published late Wednesday, the IMF said South Korea's economy is expected to grow 2.6% in 2026, up 0.7 percentage points from the April forecast, with growth "buoyed by strong external demand for semiconductors, which dominates the negative impact of the war." Samsung Electronics (KRX:005930) and SK Hynix (KRX:000660) dominate the local semiconductor sector in South Korea. The 2027 growth estimate for the country was raised 0.4 percentage points to 2.5%. The IMF noted that South Korea's first-quarter growth came in at 7.5%, more than four times the 1.8% pace projected in April. The fund said the first-quarter growth was powered by a semiconductor and AI-hardware export boom, despite the country's "heavy reliance on imported energy from the Middle East." Meanwhile, China's 2026 growth forecast was raised to 4.6%, up 0.2 percentage point from April, with the IMF citing efforts.