According to Reuters, the South Korean government announced on September 1 its largest-ever fiscal spending plan, setting the total government expenditure for 2027 at 82.1 trillion won (approximately 4.01 trillion Chinese yuan), aiming to further consolidate the country's technological advantage in the global artificial intelligence race. The budget department stated in the annual budget that the government's spending in 2027 will increase by 12.8% compared to 2026, marking the highest annual growth in South Korea's history.
This budget also reflects a shift in South Korea's fiscal policy direction. Since taking office in June last year, President Yoon Suk-yeol has advocated for an expansionary fiscal policy, contrasting sharply with the previous government's three-year period of austerity. The record-high growth in fiscal spending is largely attributed to the massive tax revenue generated by South Korea's semiconductor industry. With the global AI boom driving continuous growth in demand for high-bandwidth memory (HBM) chips, Samsung Electronics and SK Hynix are achieving unprecedented profits. The South Korean government expects total tax revenue to increase by 40.7% next year, reaching 58.44 trillion won (approximately 2.86 trillion Chinese yuan), with corporate tax revenue expected to more than double, reaching 21.67 trillion won (approximately 1.06 trillion Chinese yuan).
A significant increase in tax revenue is expected to reduce the debt burden. The South Korean government anticipates that the ratio of government debt to GDP will decrease by 3.3 percentage points to 48.3% next year, lower than this year's projected 51.6%. The scale of bond issuance will also shrink: the planned total government bond issuance for next year is 22.28 trillion won (approximately 1.09 trillion Chinese yuan), lower than this year's 22.57 trillion won; the net bond issuance, which reflects the scale of new sovereign debt, will see a more significant decline, decreasing by 1.31 trillion won to 9.63 trillion won (approximately 64.04 billion to 470.81 billion Chinese yuan), compared to 10.94 trillion won this year.