South Korea has announced its largest budget ever for 2027, with total spending set to increase by 12.8% to 820.9 trillion won ($610.14 billion). A key highlight of the budget is a major push into emerging technologies, particularly semiconductors, physical AI, and AI data centers, with an allocation of 21.3 trillion won—almost double the previous year’s investment. President Lee Jae Myung also committed 4.7 trillion won toward developing a state-of-the-art sovereign AI model, aiming to establish its position as the world’s highest performing.

Part of the government’s strategy includes significant investment in human capital, with plans to train 2,000 specialists in semiconductor design and boost regional chip industry capabilities. South Korea’s education system is aligning with these goals by expanding AI-focused programs and offering specialized university degrees linked to major tech firms like Samsung Electronics and SK Hynix. This approach integrates company-designed curricula and recruitment pipelines to ensure a steady talent supply for the nation’s semiconductor and AI sectors.

The comprehensive budget further addresses defense and social security, with defense spending rising by 8.2% to 73.3 trillion won. President Lee emphasized transforming the military into a smarter, more advanced force combining manned and unmanned systems, supported by AI, robotics, and drones. The government plans to manage this increased spending with minimal net new debt, using bond issuance primarily to refinance existing obligations, reflecting fiscal prudence alongside ambitious innovation investments.

South Korea’s economic momentum is underpinned by strong export performance, particularly in semiconductors amid rising global AI demand. October export figures soared 93.7% year-on-year to $115.3 billion, with total exports in the first ten months exceeding $930 billion. The robust trade surplus and continued growth have brought the country close to achieving $1 trillion in annual exports. President Lee highlighted these achievements as key to South Korea’s ongoing economic advancement and future strategic investments.