Seoul:The South Korean economy is projected to maintain its solid growth trajectory, driven by robust semiconductor exports, as reported by the central bank on Monday.

According to Emirates News Agency, the Bank of Korea (BOK) highlighted in a report submitted to the National Assembly that the domestic economy is anticipated to experience a significant increase in growth this year due to strong semiconductor exports, with steady growth expected to continue into the next year.

The BOK has revised its growth forecast, projecting a 3.3% increase for 2026 and a 2.9% rise for 2027, attributing this to the ongoing semiconductor upcycle and its positive effects on the broader economy. South Korea's gross domestic income (GDI) showed substantial growth, with a 13.2% increase in the first quarter and a 15.7% rise in the second quarter of this year, compared to a 3.5% increase in the fourth quarter of 2025.

In response to these strong economic conditions, the central bank raised the benchmark interest rate to 3% over consecutive meetings in July and August to counter potential inflationary pressures. Consumer prices are expected to remain above the 2% target as strong exports and investments bolster household incomes.

The report also notes that core inflation, excluding volatile energy and food prices, has risen nearly 3% recently due to supply chain disruptions linked to the prolonged Middle East crisis. The BOK plans to closely monitor inflation and economic trends to determine the timing and pace of any further rate hikes, ensuring financial stability.