South Korea Plans 8.1% Budget Rise to 728 Trillion Won, 232 Trillion Won Bonds, 4% Deficit, AI Growth Under Lee Jae Myung

South Korea has proposed a 2026 budget of 728 trillion won ($524 billion), marking an 8.1% increase from the previous year and the largest rise in four years. The government plans to issue a record 232 trillion won ($167.2 billion) in bonds to finance this expansionary fiscal agenda under President Lee Jae Myung's administration. The budget focuses on boosting research and development, particularly investments in artificial intelligence, aiming to drive AI-led economic growth. The fiscal deficit is expected to widen to 4.0% of GDP in 2026 from 2.8% in 2025, while the debt-to-GDP ratio is projected to rise to 51.6% from 48.1%. The expansionary budget seeks to address economic pressures from US tariffs, rising welfare costs, and demographic challenges, including an aging population and low birth rates.