Ambitious Fiscal Stimulus Targets AI Leadership
South Korea’s government has unveiled a record budget increase for 2026, prioritizing
artificial intelligence in its strategy to spur economic growth and secure a top-three global position in AI technologies by 2028[1][2]. The planned spending will reach
728 trillion won (approximately $525.42 billion), marking an 8.1% increase — the most significant annual jump in four years[2][4].
AI Investment at the Forefront
The Ministry of Economy and Finance detailed that more than
$7.27 billion (10.1 trillion won) will be allocated directly to
artificial intelligence initiatives in 2026, tripling previous annual commitments[3]. The government's AI stimulus efforts revolve around the following sectors:
- AI semiconductors
- Robotics and smart factory development
- Broad data center investments
- Tax incentives to accelerate research and innovation
- Regulatory streamline for faster approvals and scalable AI tools
South Korea aims to reach a 3% annual GDP growth by 2026 through these aggressive investments[1].
Fulfilling Policy Shifts for Economic Recovery
President
Lee Jae-myung, inaugurated in June, has departed from prior fiscal restraint, launching more than $20 billion in stimulus, including extra budgets and direct cash handouts to boost private consumption[4]. This approach targets demographic challenges, sluggish productivity, and international pressures, notably increased tariffs from the United States[1][2][4].
Global Tech Positioning and Strategic Partnership
South Korea’s strategy is designed to support its burgeoning tech sector and reinforce international partnerships:
- Major investments in semiconductors and biologics by industry giants like Samsung and Hyundai, including $150 billion in U.S. projects during 2025[1]
- Efforts to strengthen roles in U.S.-led tech supply chains amid intensifying competition with China[1]
According to government forecasts, South Korea’s
AI market is expected to grow at a compound annual rate of 26.24% between 2025 and 2031[1].
Legislative and Regulatory Support
The 2026 budget bill, which includes expanded outlays for
AI infrastructure and
high-tech R&D, will be submitted to Korea’s legislature for approval in the coming week[4]. The government plans new regulatory frameworks to balance rapid innovation with robust oversight[1].
