FX.co ★ South Korea Launches Record 2026 Budget for Tech and Defense Growth

South Korea has unveiled a record budget plan of KRW 728 trillion for the year 2026, reflecting an 8.1% increase from the current year and significantly surpassing the growth rate of 2025. This budget expansion is strategically designed to rejuvenate an economy challenged by U.S. tariffs, escalating welfare expenses, and demographic pressures. Financing for this ambitious plan will be partially sourced from a record bond issuance of KRW 232 trillion, as highlighted by the finance ministry. Under the leadership of President Lee Jae Myung, the government states that this spending initiative will act as a catalyst for an "economic transformation," with investments targeted towards artificial intelligence, semiconductor industries, shipbuilding, and the burgeoning K-culture sector. Additionally, support will be directed towards small enterprises and fostering regional development. The allocation for defense is set to rise by 8.3%, reaching KRW 66.3 trillion, which will be used for acquiring advanced weaponry, drones, and measures to counter threats from North Korea. While former President Trump has urged U.S. allies to increase defense budgets, South Korean officials indicate that discussions with Washington are ongoing. They note that this increase would elevate defense expenditure to approximately 2.4% of the nation’s GDP.