Chip boom lifts growth, not jobs

The Korea Development Institute (KDI) raised its 2026 growth forecast to 3.2 percent from 2.5 percent Wednesday, with semiconductors accounting for nearly all of the upgrade as global AI investment fuels a stronger-than-expected chip boom.

But KDI cut its employment forecast at the same time, warning that the benefits of rapid headline growth have yet to spread broadly to household incomes, jobs and consumption.

KDI also raised its 2027 growth forecast to 2.2 percent from 1.7 percent. The institute said the global memory chip market is expanding much faster than it expected in May.

“Of the 0.7 percentage points in the upward revision, roughly 0.6 percentage points came from semiconductors and their spillover effects,” Kim Mee-roo, senior director of KDI’s Department of Macroeconomic and Financial Policies, said.

“More than half of this year’s 3.2 percent growth can be seen as semiconductor-related.”

KDI now expects exports to grow 8.7 percent this year, 4.1 percentage points above its May forecast, while equipment investment is projected to rise 7.9 percent, up 4.6 percentage points from the previous estimate.

The institute expects the current account surplus to reach $359.7 billion this year, $120.7 billion more than it projected in May.

KDI cut its forecast for the increase in the number of employed people this year to 110,000 from 170,000. It raised its private consumption growth forecast by just 0.1 percentage points to 2.3 percent.

KDI said semiconductor production generates relatively few jobs. Weak hiring in construction and non-semiconductor manufacturing, along with slower job growth in services, has also weighed on the labor market. The institute said employment conditions have deteriorated particularly for young people.

“Our economy is posting strong growth thanks to the semiconductor boom, but the gains have not yet spread sufficiently to the incomes of most households through private consumption and employment,” Kim said. “Semiconductor producers are large companies, while most people work for small- and medium-sized businesses or small businesses, so the economy people experience will not feel as strong as the headline number suggests.”

KDI expects some of the semiconductor boom to feed into domestic demand with a lag next year, improving private consumption and employment.

The institute warned, however, that growth could slow quickly if global AI investment demand weakens or competition in the semiconductor industry intensifies.

“Our economy’s dependence on semiconductors is higher than in the past, so changes in the chip cycle can now significantly alter the macroeconomic outlook itself,” Kim said.

BY NAM SOO-HYOUN [cho.yongjun1@joongang.co.kr]