South Korea Unveils Record 600 Billion Dollar Budget for 2027
SCMP · 2 SOURCESabout 1 hour ago2 MIN
Summary
South Korea on Tuesday unveiled its most aggressive financial spending plan on record, setting total government expenditure for 2027 at 821 trillion won (US$600 billion). The 12.8 percent rise from 2026 marks the largest year-on-year increase in the country's history, made possible by a windfall from the semiconductor industry. Tax revenues are projected to surge 40.7 percent to 584.4 trillion won, with corporate tax receipts expected to more than double.
Key Points
- President Lee Jae Myung presided over a cabinet meeting to endorse the budget proposal of 820.9 trillion won (about 598.8 billion US dollars)
- The 12.8 percent increase surpasses the previous record of 10.6 percent set during the 2009 global financial crisis
- Chipmakers Samsung Electronics and SK Hynix are generating unprecedented profits driven by global demand for high-bandwidth memory used in the AI boom
- Corporate tax receipts are projected to more than double to 216.7 trillion won, helping reduce the debt-to-GDP ratio by 3.3 percentage points to 48.3 percent
- The government earmarked 2.6 trillion won for a special semiconductor budget and 3.4 trillion won for a nuclear-powered submarine programme and strategic weapons
- The research and development budget was set at 39.5 trillion won, up 11.2 percent, focusing on 10 next-generation strategic technologies including artificial intelligence
Why It Matters
The unprecedented fiscal expansion signals a major policy shift under President Lee Jae Myung, pivoting away from three years of austerity under his predecessor to an expansionary financial policy . With the Bank of Korea having raised its benchmark interest rate to 3 percent in August amid inflation concerns, the government aims to use fiscal expansion to minimize the financial pain from monetary tightening while positioning South Korea to capture opportunities in the global AI race .
The unprecedented fiscal expansion signals a major policy shift under President Lee Jae Myung, pivoting away from three years of austerity under his predecessor to an expansionary financial policy . With the Bank of Korea having raised its benchmark interest rate to 3 percent in August amid inflation concerns, the government aims to use fiscal expansion to minimize the financial pain from monetary tightening while positioning South Korea to capture opportunities in the global AI race .