Moody's Raises South Korea's Growth Forecast to 3.5%... "There Is No Substitute for Samsung Electronics and SK hynix"

[Financial News] Global credit rating agency Moody's Corporation has raised its forecast for South Korea's economic growth from 1.8% to 3.5% in just six months. The agency said the AI-driven boom in memory semiconductors is likely to last, and that there are few companies in the global market capable of replacing South Korea's advanced memory suppliers.
According to the financial investment industry and others on the 18th, Moody's Corporation recently projected South Korea's Gross Domestic Product (GDP) growth at 3.5% in its regular review report on the country's sovereign credit rating. It forecast growth of 2.7% for next year.
This year's outlook is nearly double the 1.8% Moody's Corporation presented in February. After raising it to 2.5% in its global economic outlook in May, the agency lifted it by another 1.0 percentage point just three months later. The figure is also higher than the 3.2% average forecast from eight major global investment banks as of the end of last month.
The decisive reason Moody's Corporation took a fresh look at South Korea was semiconductors.
Moody's Corporation said, "Chip demand remains strong, and there are only limited companies that could realistically replace South Korea's advanced memory suppliers." It added that as expanded investment in AI data centers drives demand for high-performance memory, including high-bandwidth memory (HBM), the supply competitiveness built by Samsung Electronics and SK hynix is unlikely to be shaken in the short term.
It also sees the semiconductor boom lasting longer than expected. Moody's Corporation forecast that the strong semiconductor cycle will continue at least until mid-2027.
Export data also supports that view. South Korea's goods exports from January to July this year rose 51% from a year earlier. Moody's Corporation said the increase was driven by "very strong semiconductor growth."
In the end, the AI semiconductor supercycle has emerged as a key factor supporting not only individual companies' earnings, but also South Korea's growth rate and sovereign credit standing.
Moody's Corporation also paid attention to the government's mega projects centered on semiconductors, AI data centers, and Physical AI. It said the policy push to secure new growth engines and ease concentration in the Capital Region reflects sustained and consistent efforts to respond to technological innovation. The agency added that if related investment leads to productivity gains, it could even lift South Korea's potential growth rate.
However, semiconductors alone will not solve South Korea's structural problems. Moody's Corporation warned that rising mandatory spending due to aging, along with defense and security costs and higher investment needed to maintain export competitiveness, could increase fiscal burdens over the long term.
South Korea's sovereign credit rating is currently Aa2. Moody's Corporation said the country's policy effectiveness and economic strengths remain key supports for its credit profile, but it also pointed to rising government debt and aging as long-term burdens.


[email protected] Kim Hyun-jung Reporter