South Korea Unveils Record 2027 Budget with 12.8% Spending Surge
South Korea proposed a 2027 budget of 821 trillion won ($596.92 billion), up 12.8% from 2026, the largest annual increase on record, driven by semiconductor tax revenues. The plan includes a 2.6 trillion won semiconductor fund, 3.4 trillion won for defense projects, and a 45.4 trillion won future response fund for youth and AI investments.
The South Korean government on September 1 unveiled its 2027 budget proposal, setting total spending at 821 trillion won (approximately $596.92 billion), a 12.8% increase from 2026 and the largest annual rise in the country's history. The Ministry of Economy and Finance attributed the spending growth to tax revenues generated by the semiconductor industry. Over the past year, Samsung Electronics and SK Hynix achieved strong profit levels amid surging global demand for high-bandwidth memory (HBM) driven by the artificial intelligence sector. The proposal continues the expansionary fiscal policy pursued by President Lee Jae-myung since taking office in June 2025.
Budget Minister Park Hong-keun said at a press conference that the government plans to deploy fiscal resources ahead of schedule based on increased tax revenues in 2026 and 2027, then gradually stabilize spending growth, phasing it down to around 5% by 2030.
The proposal allocates 2.6 trillion won for a special semiconductor budget and 3.4 trillion won for nuclear-powered submarine projects and other strategic weapons. The budget requires parliamentary approval.
The government also plans to establish a "future response fund," channeling tax surpluses from the semiconductor boom into supporting younger generations and investing in future growth industries such as artificial intelligence. In 2027, the fund will deploy 45.4 trillion won to expand youth welfare, future growth engines, and professional education programs. Supporting next-generation semiconductor infrastructure will be a core pillar of 2027 spending.