South korea allocates record AI and semiconductor funding amid tax revenue surge

The South Korean government has unveiled its largest-ever fiscal spending plan, allocating 82.1 trillion won (approximately 4.01 trillion Chinese yuan) for 2027, a 12.8% increase from 2026. This marks the highest annual growth in South Korea's history. The budget reflects a shift toward expansionary fiscal policy under President Yoon Suk-yeol, who took office in June 2022. The surge in spending is largely driven by increased tax revenue from the semiconductor industry, with Samsung Electronics and SK Hynix benefiting from the global AI boom. The government expects tax revenue to rise by 40.7% next year, reaching 58.44 trillion won (approximately 2.86 trillion Chinese yuan), with corporate tax revenue more than doubling to 21.67 trillion won (approximately 1.06 trillion Chinese yuan). This increase is anticipated to reduce the debt-to-GDP ratio by 3.3 percentage points to 48.3%, down from 51.6% this year. Bond issuance is also projected to decline, with net bond issuance expected to drop by 1.31 trillion won to 9.63 trillion won (approximately 470.81 billion Chinese yuan).