South Korean President Lee Jae-myung on Monday unveiled the country’s largest ever budget, vowing to “boldly invest in AI and future growth engines.”
Speaking in the National Assembly on Monday, Lee said total spending in 2027 will increase by 12.8% to 820.9 trillion won ($610.14 billion), including 21.3 trillion won for semiconductors, physical AI and AI data centers, almost double the 2026 level.
A separate 4.7 trillion won will be earmarked for the development of a sovereign AI model, which Lee described as having “the world’s highest performance.”
The government also plans to make significant investments in talent, including expanding AI education for students, job seekers and existing workers, as well as training 2,000 professionals to “lead semiconductor design and the regional semiconductor industry.”
South Korea has set up “contract departments” at universities, allowing students to earn industry-related degrees that provide them with a path to employment at companies such as Samsung Electronics and SK Hynix before graduation.
Companies help design courses, provide financial support and recruit qualified graduates.
The record spending plan was announced as the International Monetary Fund predicts South Korea’s economy will grow 3.3% in 2026, the fastest pace since the post-pandemic recovery in 2021.
Mr. Lee said the new government bonds would be used to repay existing debt, and the spending increase would result in “effectively no net increase in government debt.”
The budget also increases defense spending and social security spending for young people. Defense spending is expected to increase by 8.2% to 73.3 trillion won.
“We will establish a hybrid manned-unmanned system based on AI, robots, and drones, and rapidly transform it into a smart, elite, and powerful military,” Li said.
South Korea’s strong economic growth has been driven primarily by semiconductor exports, as the AI boom increases global demand for computing power.
Exports in October rose 93.7% year-on-year to $115.3 billion, a record high, according to data released by the Korea Customs Service on Sunday.
Total shipments in the first 10 months of 2026 amounted to $930 billion, exceeding the $900 billion mark for the first time.
The country recorded a trade surplus of $42.5 billion in October, with imports increasing 36% year-on-year to $72.8 billion.
Lee said that South Korea’s annual export value is within reach of $1 trillion, citing strong performance in key industries such as semiconductors.
