South Korea announced plans for a record fiscal year 2027 budget spending exceeding 800 trillion won (about USD 531 billion), fueled by tax revenues from the booming AI chip industry. The government expects tax revenues in 2027 to top 500 trillion won, far surpassing previous estimates of 412 trillion won [1, 2, 3, 4, 5, 6].

The budget will prioritize three mega-projects focused on semiconductors, AI data centers, and physical AI technologies. President Lee Jae Myung called the surge in AI-driven tax revenue a "precious resource to be used at a golden time when global AI dominance will be determined," emphasizing strategic investment opportunities [1, 3, 4, 6].

To channel excess tax revenues, the government plans to establish a Future Response Fund aimed at youth initiatives, growth engines, regional development, and talent cultivation [1, 3, 7, 4, 6, 8]. Budget Minister Park Hong-keun said, "We will draw up next year’s budget at a record-high scale of 800 trillion won." The budget will also rely on restructuring about 50 trillion won of existing expenditures rather than solely on higher tax income [1, 3].

On July 14, the government raised its 2026 GDP growth forecast from 2% to 3%, driven by strong AI demand boosting semiconductor exports and corporate profits. Finance Minister Koo Yun-cheol said, "We had initially projected this year’s real economic growth rate at two percent, but we have now revised our forecast upward to three percent." The nominal GDP growth rate is expected to reach 12.3%, potentially the highest since 1996 [9, 7, 10, 11, 8].

South Korea forecasts a record current account surplus of around USD 290 billion in 2026 while inflation is expected to remain elevated at about 2.6% this year. Employment growth projections were slightly revised down to roughly 150,000 new jobs [9, 12].

While semiconductor giants Samsung Electronics and SK hynix have reported record profits fueling optimism, recent stock market volatility raised concerns about the sustainability of semiconductor-driven growth. President Lee described the additional tax revenue as an unprecedented opportunity, saying, "Driven by an unprecedented semiconductor boom fuelled by the AI revolution, we expect to see additional tax revenues on a scale never experienced before." South Korea is investing about 800 trillion won to expand semiconductor manufacturing, including new chip fabs in Gwangju by Samsung and SK hynix [7, 10, 6, 12, 11, 8].

Experts note that South Korea’s potential GDP growth rate hovers around 2%, meaning the 3% forecast mainly reflects a cyclical semiconductor boom rather than sustained long-term growth [9].

The government will finalize the 2027 budget incorporating these plans and fiscal priorities in the coming months, setting the framework for South Korea’s investment in semiconductor and AI sectors next year [1, 3].