Numbers Spoke First
On May 11, 2026, two figures simultaneously shifted the atmosphere of the South Korean economy.
Immediately after the morning market opening, the KOSPI index broke the 7,800 threshold for the first time in history. Samsung Electronics and SK Hynix jointly renewed record highs to drive the index upward, and the KOSPI closed at 7,822.24, surging 4.32% from the previous day. On the same morning, the Korea Customs Service announced that preliminary exports for May 1–10 stood at $18.4 billion. This marked the largest scale on record for the May 1–10 period, surpassing the previous record of $16.8 billion set in 2024 in just two years.
Against the backdrop of these two figures, Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-chul took his seat in the press room at the Government Complex-Sejong in the afternoon. During a press briefing that day, he announced that South Korea's economic growth rate this year is expected to exceed 2%. This marks the first time the government has officially mentioned the possibility of upwardly revising this year's growth forecast.
This remark was not a mere expression of optimism. It was also a signal that the government is fully presenting four pillars—supply chain stability, energy security, AI transformation (AX), and green transformation (GX)—as the core directions for economic management in the second half of the year. This article comprehensively reviews the economic indicators and policy details that formed the background of these remarks, as well as future tasks.
■ Q1 GDP Growth at 1.7% — A Start That Exceeded Expectations
There are grounds for Deputy Prime Minister Koo's confidence in growth exceeding 2%. Gross Domestic Product (GDP) for the first quarter grew by 1.7%, significantly outperforming market expectations, and most major investment banks (IBs) are revising their growth forecasts for this year upward, he explained.
In the '2026 Economic Growth Strategy' announced by the government last January, the target growth rate for this year was set at 2.0%. However, 1.7% has already been achieved in the first quarter alone. Through simple arithmetic, achieving 2% annually appears to be an effortless figure. Deputy Prime Minister Koo went a step further to publicly promise growth exceeding 2%, and within the government, the prevailing sentiment is reportedly that if the semiconductor boom continues, growth in the mid-2% range is also possible.
The current account balance also broke record highs. The current account recorded a surplus of $73.78 billion in the first quarter of this year, setting a new all-time high on a quarterly basis. Compared to the previous quarterly record surplus of $39.17 billion in the fourth quarter of last year, this is an 88.4% increase, and a 278.6% increase compared to the same period of the previous year ($19.49 billion).
This is a figure that Deputy Prime Minister Koo directly evaluated as "demonstrating the growth potential of our economy." The first-quarter surplus accounts for 59.96% of last year's total annual surplus of $123.05 billion, and considering that last year's annual current account itself was a record high, evaluations indicate this significantly exceeds market expectations.
Export rankings have also shifted. Based on internationally comparable statistics, South Korea surpassed Japan and Italy, rising from 7th to 5th place in global export rankings.
■ Semiconductor Exports Account for Approximately 46% of the Total
At the center of all these indicators is semiconductors.
Semiconductor exports for May 1–10 reached $8.5 billion, surging 149.8% year-on-year to record an all-time high for the May 1–10 period. Semiconductors accounted for 46.3% of total exports, up 19.7 percentage points from a year ago, and have been breaking record highs for the corresponding month for 13 consecutive months. These figures are preliminary customs clearance estimates by the Korea Customs Service and are subject to minor changes upon final confirmation.
The backdrop of the export boom is the surge in artificial intelligence (AI) server investments. The main factor is analyzed to be the soaring prices of high-performance memory such as high-bandwidth memory (HBM), DDR5, and NAND flash, driven by the expansion of AI server investments. Reports also indicate that global big tech companies are even offering to support factory construction costs and prepay equipment purchase funds in order to secure supplies.
Export status by major country also showed steady growth. Exports to major markets including China (81.8%), Vietnam (89.3%), the United States (17.9%), Taiwan (96.7%), and the European Union (11.3%) all increased, with the top three markets of China, Vietnam, and the United States accounting for 55.3% of the total.
Computer peripherals exports also increased by 382.8%. On the other hand, passenger car exports fell by 26.0% and steel products by 3.2%. The export concentration centered around semiconductors is becoming distinct, which is both an opportunity and a structural vulnerability.
The profitability of Samsung Electronics and SK Hynix has also reached unprecedented levels.
Samsung Electronics recorded consolidated revenue of 133.9 trillion won and operating profit of 57.2 trillion won in the first quarter of this year. Operating profit increased by 185% compared to the previous quarter, marking a record-high quarterly performance.
SK Hynix recorded revenue of 52.5763 trillion won and operating profit of 37.6103 trillion won (an operating profit margin of 72%) during the same period, achieving its highest quarterly performance since its founding. The year-on-year operating profit growth rate reached 405%.
Combining the first-quarter operating profits of the two companies exceeds approximately 94 trillion won. This is the largest single-quarter level in South Korean corporate history and a figure that literally looks like a typo, but has been confirmed through each company's disclosures.
■ Four Pillars of Second-Half Strategy: Supply Chain, Energy, AX, and GX
Deputy Prime Minister Koo made it clear that he will not rest on the laurels of the semiconductor export boom.
The government is preparing new policies centered on supply chain stability, energy transition, and energy security as the core pillars of economic strategy for the second half of the year, he stated. This is an expression of his determination to place emphasis on building an economic structure more resilient to external shocks.
In the June economic growth strategy for the second half of the year, the government plans to unveil measures to discover new growth engines leading the post-semiconductor era, along with countermeasures for supply chain and energy security following the Middle East war.
First, supply chain restructuring.
The instability in crude oil supply and demand triggered by the Middle East war has once again highlighted the necessity of supply chain diversification. The government is accelerating efforts to restructure the supply chain system, focusing on supporting the recycling of critical minerals, supporting new investments by advanced materials, parts, and equipment (MPE) companies, and expanding domestic production of economic security items. The budget allocated for strengthening supply chains amounts to approximately 2 trillion won.
Second, energy security and response to high oil prices.
The aftermath of the Middle East war continues, and the burden of crude oil imports remains at a high level. Crude oil import values recorded around $2.8 billion this month, reflecting the impact of rising international oil prices and a strong USD/KRW exchange rate.
Accordingly, the government has decided to maintain the petroleum price ceiling system until the Middle East war stabilizes. Even under high oil price conditions with international crude oil around $100 per barrel, the consumer price inflation rate for April was managed at the 2.6% level, and the price ceiling system had a price increase suppression effect of about 1.2 percentage points.
Crackdowns on hoarding will also be intensified. Deputy Prime Minister Koo stated that amendments to the Price Stabilization Act have been initiated, including confiscation measures, reporting bounties, and the establishment of administrative fines for unjust enrichment regarding hoarding activities. This is interpreted not as a mere warning, but as an expression of intent to strengthen effective sanctions through legal revisions.
Plans to expand renewable energy are also being pursued concurrently. The government has allocated over 1 trillion won to accelerate the deployment of renewable energy, create RE100 industrial complexes, and build an energy highway, thereby speeding up the energy structural transition.
Third, AI Transformation (AX) — Intelligence Across All Industries.
Deputy Prime Minister Koo stated that he will fully apply the artificial intelligence transformation (AX) and green transformation (GX) across industries, administration, and daily life to create global best practices. The vision is to pursue structural productivity enhancement through the expansion of smart factories, digital administration, and eco-friendly infrastructure construction.
The policy budget related to AX exceeds 1 trillion won, with the goal of driving a massive transformation of our industries through AI to overcome manufacturing crises and establish a breakthrough for rebound.
The government also stated its stance to prepare countermeasures so that no industries or classes are alienated in the process of AX, and to support existing industries in enhancing competitiveness by utilizing AI.
Fourth, Green Transformation (GX) — The Intersection of Carbon Neutrality and Export Competitiveness.
As global environmental regulations such as the EU's Carbon Border Adjustment Mechanism (CBAM) and Packaging and Packaging Waste Regulation (PPWR) are fully implemented in 2026, not only exporting companies but also companies supplying large enterprises are required to make efforts to meet these environmental standards.
In response, the government is establishing the 2035 NDC (Nationally Determined Contribution) implementation and the K-GX strategy, while pursuing structural transition to foster a carbon-neutral ecosystem. GX is establishing itself not merely as an environmental policy, but as an essential strategy for maintaining global export competitiveness.
■ Fiscal Strategy: Simultaneous Pursuit of Expansionary Fiscal Policy and Structural Restructuring
Deputy Prime Minister Koo also made his direction clear regarding fiscal management. He stated that while raising potential growth rates and responding to polarization issues through fiscal policy, intensive expenditure restructuring will be pursued concurrently. His logic is that excessively tightening fiscal policy could reduce discretionary expenditure investments, triggering a vicious cycle that instead decreases tax revenues.
Furthermore, starting in the second half of this year, the Economic Ministers' Meeting is planned to be expanded and reorganized into the 'Structural Reform Ministers' Meeting,' and active responses will be made to low birth rates and labor issues such as resolving polarization, demographic challenges, and the extension of the retirement age.
Mentions were also made regarding the size of the excess tax revenue. At the time of the first supplementary budget, it was judged that approximately 25.2 trillion won more tax revenue would flow in than initially forecasted, and tax revenue is expected to increase further due to the favorable semiconductor industry conditions and active stock market. However, the specific scale can be grasped at the time of corporate tax interim payments in August.
A message was also delivered to large conglomerates ordering long-term investment over short-term profit distribution. He emphasized that companies need to allocate more resources to future-oriented innovation and investment rather than remaining at short-term profit distribution, and that it is time to discover second and third growth engines beyond memory semiconductors like HBM.
■ Samsung Electronics Labor Conflict — Emerging as a Variable in the Semiconductor Boom
An unexpected topic that surfaced during the press briefing that day was the labor conflict at Samsung Electronics. Amid a situation where the Samsung Electronics labor union has mentioned the possibility of a strike over incentive funding and payment criteria, Deputy Prime Minister Koo unusually stepped forward to speak directly.
Deputy Prime Minister Koo stated, "This is an important time when the entire world is coming to South Korea to figure out how to secure chips because they cannot get semiconductor chips right now," adding, "Unfortunate events where we miss opportunities due to discord between labor and management must not happen." He also urged a smooth agreement, mentioning that Samsung Electronics labor and management are making efforts to reach a consensus centered around the National Labor Relations Commission.
This remark implies that the government is also closely monitoring the export shocks that production disruptions at Samsung Electronics would bring under the current structure where semiconductor exports account for about 46% of total exports. The underlying concern is that if a strike materializes during the semiconductor super-cycle, the export momentum built throughout the first quarter could be shaken.
■ KOSPI Surpasses 7,800 — Overheating or Fair Evaluation?
On May 11, the KOSPI index closed above the 7,800 threshold for the first time in history. Two semiconductor market leader stocks jointly renewed record highs to pull up the entire market. Regarding this, Deputy Prime Minister Koo denied market overheating.
Viewed on a price-to-book ratio (PBR) basis, the South Korean stock market remains at a low level compared to advanced economies. While perspectives on industry conditions may vary depending on how the AI cycle unfolds, he explained that looking at situations such as pre-orders being secured through next year, there is a trend of investing based on the growth potential of the South Korean market.
Regarding the re-introduction of the Financial Investment Income Tax (FIIT), he maintained a cautious stance, stating that the FIIT, which was abolished in 2024, is a task to be reviewed at a time when capital market conditions and market environment are sufficiently established. Regarding real estate tax reforms, he also refrained from elaboration, stating that various opinions are being gathered. With the grace period for heavy capital gains taxes on multiple homeowners ending on May 9, the existing policy stance of simultaneously pursuing supply expansion and demand management was reaffirmed.
■ External Risks: Dual Pressures of the Middle East War and Protectionism
Domestic indicators are bright, but the external environment remains fraught with uncertainty.
The prolonged Middle East war continues to aggravate the burden of energy imports. Energy import values such as crude oil, gas, and coal remain at levels about 9% higher than last year. Under conditions where international oil prices hover around $100 per barrel, energy security is directly tied to economic security.
Protectionism is also materializing. The tariff war between the US and China is concentrated in high-tech sectors such as AI and semiconductors, changing global manufacturing flows, and this is evolving beyond simple economic measures into a strategic tool to secure geopolitical dominance.
Regulatory risks originating from Europe are also increasing. The IMF expects the global trade volume growth rate to decline from 4.1% in 2025 to 2.6% in 2026 due to protectionist policies of major countries.
Regarding US Treasury Secretary Scott Bessent's scheduled visit to South Korea on May 13, Deputy Prime Minister Koo stated that he will not pursue an immediate bilateral meeting. The reason is that he already met Secretary Bessent in Washington, D.C., last April and is scheduled to meet him again at the G7 Plus Finance Ministers' Meeting.
■ Light and Shadow of Industrial Structure — Preparing for the Post-Semiconductor Era
Behind the glossy indicators generated by the semiconductor boom, structural tasks are piling up.
Although business conditions show improving trends in 2026, it is worth paying attention to the possibility that disparities between corporate sizes and industries may intensify. Based on the manufacturing production index, the gap between large corporations and small and medium-sized enterprises (SMEs) widened from 10.5 points in December 2024 to 15.7 points in December 2025, and the SME loan delinquency rate stood at 0.89%, significantly higher than the 0.16% for large corporations.
Major industries other than semiconductors are suffering from sluggish exports. Influenced by uncertainties in US tariff policies, expanded overseas production, and increased local parts procurement, automobile exports decreased by 0.6%, shipbuilding was sluggish by 4.0%, and general machinery by 3.7%. If the current structure where semiconductors account for about 46% of total exports is prolonged, the risk of the entire national economy fluctuating according to the cycle of a single industry will grow even larger.
Deputy Prime Minister Koo's emphasis that "it is time to discover second and third growth engines beyond memory semiconductors like HBM" precisely targets this point. Specific details are scheduled to be presented in the second-half economic growth strategy to be announced in June.
■ KBR INSIGHT: How to Read Policy Signals
5 Points Companies and Investors Must Note
① The 'Second-Half Economic Growth Strategy' is the core event. Deputy Prime Minister Koo concentrated growth figures, new growth engine directions, and details of supply chain and energy policies all on the June announcement. Scheduled for release at the end of June, this strategy will serve as the blueprint for industrial policy in the second half of the year.
② Beware of single-item semiconductor dependency risks. The structure where national economic indicators are swayed by a single semiconductor item accounting for about 46% of export share has implications that equally apply to corporate management. It is an appropriate time to review business diversification beyond core businesses.
③ AX and GX are mandatory requirements, not policy directions. As the government has allocated over 1 trillion won each to AX and GX, the second half of 2026 presents a critical opportunity for companies holding business models capable of receiving government support in these two fields.
④ Amendments to the Price Stabilization Act directly impact the distribution and oil refining industries. The establishment of administrative fines for hoarding and the introduction of a reporting bounty system mean new compliance burdens for energy-related distribution networks and wholesale and retail businesses.
⑤ Pay attention to policies closing the gap between large corporations and SMEs. As the government has placed response to polarization as a core agenda through the Structural Reform Ministers' Meeting, budgets and policies related to SME support and large-SME win-win cooperation programs are highly likely to materialize in the second half.
■ Conclusion: The South Korean Economy at the Threshold of Transformation
The news on May 11, 2026, was not simply a story of good numbers. Figures such as the KOSPI closing at 7,822.24, exports of $18.4 billion, and growth projected to exceed 2% are substantial achievements generated by the semiconductor AI cycle, but at the same time, shadows such as high oil prices, global protectionism, and the gap between large corporations and SMEs are also growing longer.
The core of the second-half strategy previewed by Deputy Prime Minister Koo that day is 'transformation.' Preparing for the post-semiconductor era, strengthening energy security, infusing AI across industries, and preemptively responding to carbon regulations. These four tasks are not short-term economic boosts, but structural reorganizations to secure mid-to-long-term competitiveness.
Whether the June announcement of the second-half economic growth strategy will contain a concrete roadmap to realize this, and whether it can create a genuine turning point for the South Korean economy—both the market and corporations are watching closely.