SC: Korea's Growth Rate to Reach High 1% Next Year... Asset Diversification Recommended Over Stock Investment

2026 Global Financial Market Outlook and Investment Strategy
Semiconductor-Led Export Growth Drives Economic Expansion
Room for Improvement in Domestic Demand and Investment
Average Exchange Rate at 1,430 Won... "Weak Won Is the New Normal"
'Neutral' on Korean Stock Market

SC First Bank has forecasted that South Korea's economic growth rate will be in the high 1% range next year. The bank expects a moderate recovery in consumption and investment, with a strong rebound in the first half of the year driven by semiconductor exports. However, it projects that the growth momentum will slow in the second half. Regarding the sharp rise in the Korean stock market this year, SC First Bank maintained a 'neutral' investment opinion, citing reasons such as the weak Korean won.

According to the financial sector on December 26, SC First Bank, together with global investment strategy experts from its parent company Standard Chartered (SC) Group, presented these views in its report "2026 Global Financial Market Outlook and Investment Strategy."

SC First Bank predicted that South Korea's growth rate this year would show a recovery in the high 1% range, stating, "In the first half of next year, we expect solid growth driven by a moderate recovery in domestic demand and export momentum led by semiconductors." However, considering the increased dependence on semiconductors, the bank believes that growth in the second half will be closely tied to the trend in semiconductor exports. Therefore, it forecasts that South Korea's economic growth next year will follow a pattern of 'stronger in the first half, weaker in the second half.'

The bank also expects the increase in semiconductor-led exports to continue next year. In particular, with robust demand for high-bandwidth memory (HBM), a concentration of demand for general-purpose semiconductors among companies concerned about supply shortages and further price increases is expected to boost semiconductor exports in the first half. While exports excluding semiconductors are expected to remain relatively weak, SC First Bank projected that gradual recovery could continue due to the resolution of U.S. tariff uncertainties (automobiles) and a boom in orders (shipbuilding).

Regarding domestic demand next year, SC First Bank assessed that "the pace will slow, but the recovery path remains valid." As policies to improve domestic demand, such as the distribution of consumption coupons, have been concentrated this year, the pace of consumption recovery may gradually slow. However, the bank expects that continued expansionary fiscal policy by the government, as well as the delayed effects of monetary easing, will provide sufficient recovery potential. For the investment sector, a generally sluggish trend is expected. Nevertheless, the resumption of corporate facility investments due to reduced tariff uncertainties and a rebound in construction investment due to base effects are seen as positive factors.

The bank expects the average won-dollar exchange rate next year to be around 1,430 won. It diagnosed that this weakness in the won is becoming the 'new normal,' as outbound investments by domestic residents have increased since the COVID-19 pandemic, and corporate investments in the United States have expanded under the Trump administration, leading to intensified dollar outflows. Additionally, it emphasized that net outflows of about 20 billion dollars (approximately 29 trillion won) per year due to investment negotiations with the United States are also a burden.

SC First Bank maintained a neutral opinion on investment in the Korean stock market. The bank cited the burden from this year's sharp stock price increases and the rapid rise in the won-dollar exchange rate due to the Korean won's depreciation against major currencies. Therefore, it stressed the importance of diversified asset allocation into global assets rather than excessive concentration in Korean stocks. However, it also noted that global capital flows resulting from a weaker U.S. dollar could attract foreign funds into the Korean stock market, and the government's expansionary fiscal policy stance is likely to have a positive impact on the stock market, making it more likely for the index to rise in the first half than in the second half.