South Korea to sharply increase spending to power AI-based growth
With economic growth under pressure, Seoul has proposed a 728-trillion-won budget for 2026, dedicating 10.1 trillion won to AI and boosting R&D sharply.
South Korea’s government has outlined a 2026 budget totalling 728 trillion won, a substantial 8.1 percent increase and the most significant rise in four years.
The new administration in South Korea, under President Lee Jae-myung, is using expansionary fiscal measures to drive innovation amid economic headwinds.
Research and development spending will see a record 19.3 percent jump to 35.3 trillion won, with AI receiving the steepest increase. Planned AI expenditure of 10.1 trillion won marks a threefold rise over 2025 and includes procuring 15,000 high-performance GPUs.
Industrial policy funding will grow by 14.7 percent, while social welfare and defence allocations also rise by over 8 percent. The fiscal deficit is expected to widen to 4.0 percent of GDP, with the public debt ratio forecast to reach 51.6 percent.
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