Korea Credit Rating '2026 Industry Outlook'… Semiconductors smile, construction and chemicals cry

Korea’s credit rating agency forecasts that by 2026, the Korean economy will show a slow recovery supported by a favorable semiconductor cycle and expansionary fiscal policies. However, it also points out that addressing structural issues caused by widening gaps between industries remains an unresolved challenge.

At the online “2026 Industry Outlook” briefing held on the 7th, Korea’s credit rating analysis stated that although Korea’s export performance was strong last year, economic growth remained at a low level of around 1.0% due to shrinking private consumption and sluggish construction industry conditions. However, thanks to increased global semiconductor demand, domestic demand recovery, and expanded government fiscal spending this year, the agency is optimistic about the economic outlook, expecting growth to improve to 1.8%.

But Korea’s credit rating is concerned that this recovery may be uneven across different industries. The agency indicated that sectors such as semiconductors, shipbuilding, and defense are expected to maintain good momentum, while petrochemicals, construction, distribution, duty-free, steel, and secondary batteries will still face unfavorable conditions. The credit outlook for these industries has also been rated negatively, which could further deepen polarization between sectors.

The international economic environment may also become a burden for Korea’s economy. Korea’s credit rating predicts that although this year’s global markets are positive due to increased investment in AI-related equipment, global trade contraction and tariff barriers caused by rising protectionism will slow down global growth. The agency specifically warns that supply chain disruptions could lead to higher production costs and reduced trade volume, posing structural risks to Korea’s export-dependent manufacturing sector.

The outlook for financial markets is also expected to be complex. Korea’s credit rating anticipates that the US policy interest rate will reach a neutral level of 3.25% by the end of this year, but also assesses that there is limited room for Korea to cut interest rates. Although recent sharp increases in market interest rates may ease somewhat, the delay in lowering the benchmark rate could lead to a certain degree of widening in the spread between credit bonds and government bonds (credit spread).

It is expected that this year, investors will continue to favor selective investments across industries. Funds are likely to concentrate on sectors with lower credit risk and favorable cyclical positions, such as storage semiconductors, shipbuilding, and defense, while industries under greater structural adjustment pressure may continue to face downward credit rating pressures. This trend could become an important variable in domestic industrial restructuring and strategic deployment in financial markets.