Busan New Port across Busan's Gangseo-gu District and Jinhae-gu District of Changwon, Gyeongsangnam-do Province, is filled with cargo-packed vessels at its berths. (Yonhap News)

By Kang Gahui

Moody's has nearly doubled its growth forecast for the Korean economy this year based on stronger-than-expected expansion stemming from the continued semiconductor boom and robust exports.

In a report released after its latest periodic review of the country's sovereign credit, the global ratings agency predicted that gross domestic product will grow 3.5% this year and 2.7% next year.

The projection by Moody's this year has gone from 1.8% in February to 2.5% in May and another full percentage point this month.

Moody’s said the semiconductor cycle is expected to remain strong through at least the middle of next year, adding, "Chip demand continues, and there are limited realistic alternatives to Korea's advanced memory suppliers."

Exports of goods from January through July also rose 51% year on year, which Moody's attributed to surging growth in semiconductor demand.

It also mentioned the government's megaprojects for the development of three key sectors: semiconductors, artificial intelligence (AI) data centers and physical AI.

Moody's said Korea is eyeing new growth engines through the megaprojects while promoting balanced development beyond the Seoul metropolitan area. This strategy demonstrates sustained and consistent policy efforts to keep pace with technological innovation, it added.

kgh89@korea.kr