The Bank of Korea has added $200bn to its current account forecast in three months, and now expects a surplus of $450.0bn this year
Four hundred and fifty billion dollars.
That is what the Bank of Korea now expects the country's current account surplus to be this year. In May the same forecast was $250bn. The Bank published its August Economic Outlook, dated 27 August, the day after the Monetary Policy Board raised the Base Rate to 3.00 percent, and the report carries the forecast tables that the decision statement could not. Last year's surplus was $123.1bn. That was itself a record, and the figure the Bank has now put in print is more than three times it, with $430.0bn pencilled in for 2027 against the $190bn it was carrying three months ago.
Almost all of it is goods. The Bank puts the goods surplus at $467.2bn for this year, the services deficit at $37.0bn, and primary and secondary income at $19.8bn. It attributes the goods figure to semiconductor demand as global spending on artificial intelligence infrastructure expands, and to what it calls a sharp increase in prices stemming from supply constraints.
Where the 0.7 points came from
Growth for 2026 is 3.3 percent, up 0.7 points from May. The decision statement said that much on Thursday. What the outlook adds is the arithmetic underneath, and the Bank splits the revision into four named pieces: a greater than expected semiconductor boom worth 0.35 points, an upward revision to preliminary data worth 0.2, three mega projects worth 0.1, and a smaller than expected impact from the Middle East worth another 0.1, less 0.05 for everything else.
Read by expenditure instead, the same 0.7 points is 0.45 from net exports, 0.2 from facilities investment, 0.05 from private consumption and 0.05 from other items, less 0.05 from construction investment.
Goods exports are now forecast to grow 9.7 percent this year against 4.9 percent in May. Goods imports were revised further, up 6.8 points to 9.8 percent. Facilities investment goes to 6.8 percent from 4.4 percent.
One line was revised down
Employment. The Bank expects the number of people in work to rise by 140,000 this year, which is 40,000 fewer than it forecast in May and 50,000 fewer than the 190,000 added in 2025. The employment rate stays at 62.9 percent. The Bank puts the shortfall against May on the Middle East situation and on weakness in vulnerable sectors including construction, and expects private sector hiring to recover in the second half as that impact eases.
Inflation was left where it was. Consumer prices are forecast to rise 2.7 percent this year and 2.3 percent next year, both unchanged from May. Core inflation, which strips out food and energy, was nudged up to 2.5 percent for both years, from 2.4 and 2.3.
What the forecast assumes, and what happens if it is wrong
The Bank states its assumptions rather than leaving them implicit. That is the part of the document a reader outside Korea should look at first. Three of them carry the report. Brent crude is assumed to average $86 a barrel this year, down from the $93 assumed in May, and $74 next year. Transit through the Strait of Hormuz is assumed to resume partially in the second half. On tariffs the Bank assumes the current rate on Korea holds, being a forced labour tariff of 12.5 percent, 15 percent on cars and 50 percent on steel, with 15 percent on pharmaceuticals from 29 September, an overcapacity tariff from the fourth quarter, and 15 percent on semiconductors from the first quarter of 2027.
It also publishes the other outcomes. If major technology firms scale back their spending on artificial intelligence as monetisation is delayed and borrowing costs rise, growth would be 0.1 point lower this year and 0.4 points lower next year. If semiconductor demand runs stronger instead, it would be 0.2 points higher this year and 0.6 points higher next. A prolonged deadlock in the negotiations between the United States and Iran would take 0.1 point off growth this year and add 0.4 points to inflation next year.
If both arrive together, the Bank notes, the effects could be larger than the sum of the two.
