Global banks expect Korea's chip-driven growth to slow faster next year than the Bank of Korea does
Eight global banks raised their average 2026 growth forecast for South Korea to 3.5% in September, a sixth monthly rise, on surging chip exports. At 2.8% for 2027, just under the Bank of Korea's 2.9%, they expect a sharper slowdown than the central bank does.
The Investor · Invest desk
What happened
- Chip shipments passed $60 billion in September for the first time, roughly half of the month's record exports of $120.94 billion.
- The banks' 2026 average stood at 2 percent at the end of last year, then rose to 2.1 percent in January, 2.4 percent in April and 2.8 percent in May.
- JPMorgan holds the highest 2026 forecast of the eight banks, 4 percent, up from 3.8 percent a month earlier.
- Second-quarter GDP grew 0.6 percent on the quarter, against the Bank of Korea's May projection of 0.2 percent.
- The OECD raised its 2026 estimate for Korea to 3.7 percent, up 1.1 points since June and the largest upward revision among G20 economies.
Why it matters
- What it limits constraint The banks have nearly caught up with the central bank on 2027, so any further upgrade to next year now depends on new chip data.
- Who's exposed exposure With one product supplying half of exports, a single weak month of chip shipments would pull down the 2026 and 2027 forecasts together.
- Who has to decide decision Anyone reading the bank consensus as a bet on a lasting boom has to account for a 2027 forecast that already builds in a steeper slowdown than the central bank's.
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Most of September's move came from two banks. UBS added 0.7 point and Bank of America 0.5 [4][5]. Spread across eight banks, those two revisions lift the average by 0.15 point, about three-quarters of its rise from 3.3 to 3.5 percent [23][1].
The Korea Center for International Finance figure is an average in the Korea Herald's account and a median in Yonhap's [1][7]. If it is a mean, the four banks the reports name average about 3.7 percent. The other four must then average about 3.3 percent, level with the Bank of Korea's own forecast for this year [24][11].
The banks and the central bank differ on the shape of the next two years. The banks sit 0.2 point above the Bank of Korea for 2026 and 0.1 point below it for 2027 [21]. Their path has growth slowing by 0.7 point next year, against the central bank's 0.4 [19]. The central bank also moved further on 2027. It raised its projection by 0.8 point, against the 0.3 point the banks' 2027 average gained in September, and two of the eight banks did not raise their 2027 forecasts at all [20][2].
Momentum is the case for a longer boom. According to Yonhap, the banks expect the global chip cycle to stay stronger and more resilient than previously anticipated [9]. Their 2026 average has climbed 1.5 points since the end of last year [13]. The expectation rests on one product. September's 83.5 percent year-on-year rise puts the same month of 2025 near $65.9 billion, so exports grew by about $55 billion in a year [14][22]. That increase is a little smaller than this September's chip shipments alone [15].
If chip shipments hold at September's level, the banks' 2027 average probably passes 2.9 percent, and the banks were simply late in catching up with the central bank. If shipments flatten, the 2026 figure survives on growth already booked, including 1.8 percent quarter-on-quarter in the first quarter [16], while the 2027 numbers stall. A sharp fall in a single month would cut both years together, with chips making up half of exports [15].
I'd expect the middle case, because the banks' own forecasts already build in the larger slowdown [19]. That view is wrong if the 2027 average rises past 2.9 percent while this year's holds at 3.5. The KCIF figures are forecasts by bank economists, and the reports do not cover the won, Korean equities or the policy rate [1].
What to watch
- October export data, and whether chip shipments stay above the $60 billion first reached in September.
- Whether the banks' 2027 average moves past the Bank of Korea's 2.9 percent in the next KCIF tally.
- The third-quarter GDP estimate, the first quarterly figure to include September's record export month.
Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.
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- [1]
Eight major global investment banks projected average growth of 3.5 percent for South Korea this year at the end of September, up from 3.3 percent a month earlier, according to figures released Wednesday by the Korea Center for International Finance.
- [2]
Six of the eight banks upgraded their forecasts for 2027, pushing the average to 2.8 percent from 2.5 percent at the end of August, closer to the Bank of Korea's projection of 2.9 percent.
- [3]
JPMorgan raised its estimate to 4 percent from 3.8 percent, the highest among the eight banks.
- [4]
UBS lifted its forecast to 3.5 percent from 2.8 percent.
- [5]
Bank of America increased its projection to 3.6 percent from 3.1 percent.
- [6]
Citi raised its estimate to 3.8 percent from 3.7 percent.
- [7]
Yonhap describes the 3.5 percent figure as the median growth forecast by major foreign institutions for 2026, raised in September from 3.3 percent in August.
- [8]
The average forecast stood at 2 percent at the end of last year and rose to 2.1 percent in January, 2.4 percent in April and 2.8 percent in May.
- [9]
The upward revisions reflect expectations that the global semiconductor cycle will remain stronger and more resilient than previously anticipated.
- [10]
The banks' average forecast for this year has risen for six consecutive months, climbing from 2.4 percent in April to 3 percent in June and 3.2 percent in July.
- [11]
The banks' average is above the Bank of Korea's 2026 forecast of 3.3 percent, which the central bank raised in August.
- [12]
The Bank of Korea lifted its projection for next year to 2.9 percent from 2.1 percent.
- [13]
The banks' 2026 average has risen 1.5 points since the end of last year.
- [14]
Exports reached a monthly record of $120.94 billion in September, up 83.5 percent from a year earlier.
- [15]
Semiconductor shipments topped $60 billion for the first time in September, accounting for roughly half of total exports.
- [16]
Real GDP expanded 1.8 percent in the first quarter from the previous quarter.
- [17]
Real GDP grew 0.6 percent in the second quarter, exceeding the Bank of Korea's May projection of 0.2 percent.
- [18]
The OECD raised its 2026 estimate for Korea to 3.7 percent, up 1.1 percentage points from June, the largest upward revision among G20 economies.
- [19]
The banks' forecasts imply growth slowing 0.7 point from 2026 to 2027; the Bank of Korea's imply 0.4 point.
- [20]
The Bank of Korea raised its 2027 projection by 0.8 point; the banks' 2027 average rose 0.3 point in September.
- [21]
The banks are 0.2 point above the Bank of Korea for 2026 and 0.1 point below it for 2027.
- [22]
September 2025 exports were about $65.9 billion, so exports rose by about $55 billion year on year.
- [23]
UBS and Bank of America's revisions together add about 0.15 point to the eight-bank average, roughly three-quarters of its 0.2-point September rise.
- [24]
If 3.5 percent is a mean of eight, the four named banks average about 3.7 percent and the four unnamed banks average about 3.3 percent.
Sources
3 independent publishers whose own reporting we read for this story.
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- koreajoongangdaily.comGlobal investment banks raise Korea's growth outlook on chip boom
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Topics and entities
Topics
- South Korea economic outlook
- Semiconductor Cycle Valuation
- Economic forecasts
Entities
- SK hynix
- Bank of Korea
- Citi
- Samsung Electronics
- OECD
- J.P. Morgan
- Korea Center for International Finance
- Bank of America
- UBS