South Korea’s Budget Expected to Top 1,000 Trillion Won by 2030 as Government Pledges to Keep Debt Below 50% of GDP

South Korea expects government spending to exceed 1,000 trillion won by 2030, even as the government projects a lower debt burden and improved fiscal balances over the next five years.

The country’s debt-to-GDP ratio is forecast to drop from 50.6% this year, based on the supplementary budget, to 48.3% next year. It is then expected to remain in the 48% to 49% range and reach 49.0% in 2030. The government says it will keep the ratio below 50% through that year.

The improvement reflects a sharp increase in the GDP denominator and a surge in tax revenue linked to the semiconductor boom. Nominal GDP is expected to grow 12.3% this year from the previous year. National tax revenue is projected at 584.4 trillion won next year, up 169 trillion won, or 40.7%, from 415.4 trillion won this year.

The government expects tax revenue to grow by an average 13.4% annually from 2026 through 2030, nearly three times last year’s 4.6% forecast. Corporate tax revenue is projected at 217.7 trillion won, up 114% from this year’s supplementary budget, while income tax revenue is expected to reach 180 trillion won, an increase of 32%. Total revenue is forecast to rise by 180 trillion won to 880.8 trillion won.

The management fiscal balance deficit, which excludes social security fund balances, is expected to narrow from 3.8% of GDP this year to 0.1% next year. It is then projected to widen gradually to 2.9% by 2030, remaining within the government’s 3% target. The projections assume detailed tax estimates through 2028 and 3% annual revenue growth afterward. Their optimism depends on the semiconductor supercycle. In 2023, when Samsung Electronics and SK hynix paid no corporate tax during a downturn, tax revenue fell by 52 trillion won from the previous year. A shorter boom or external pressures could reverse the current outlook.