Korea's Economy Faces Headwinds as Oil Prices Soar

Korea's economy is expected to maintain strong growth in the fourth quarter due to robust semiconductor exports, but weak domestic demand and rising oil prices pose risks.

The Organization for Economic Cooperation and Development (OECD) raised its 2026 economic growth forecast for Korea to 3.7 percent from 2.6 percent, citing strong industrial production and export growth.

Strong export growth, driven largely by semiconductors, has been a key factor behind the positive outlook. According to the Ministry of Trade, Industry and Resources, Korea's exports reached a record $98.25 billion in August, up 68.7 percent from a year earlier.

Analysts expect the recovery in domestic demand to lag behind the export rebound, with elevated global oil prices stemming from geopolitical tensions posing upside risks to inflation and weighing on consumer spending.