Expanding 2026 budget by 8.1% prioritizes reinforcement in research and development, artificial intelligence investments

South Korea has presented a budget proposal for 2026, marking a significant shift in the nation's economic direction. The proposed budget, amounting to 728 trillion won ($525 billion), sets the stage for the government's five-year economic development blueprint, as outlined by Finance Minister Koo Yoon-cheol.

This budget proposal, the first full-year plan unveiled by the new administration of President Lee Jae Myung, serves as a milestone in the country's economic strategy. The focus is on building a "super innovation economy," led by cutting-edge technologies such as AI.

The budget for innovation-related sectors is increased to 72 trillion won, an increase of 21 trillion won from the previous year's proposal. The government plans to invest about 6 trillion won over the next five years in regional innovation hubs that develop and test AI-enabled technologies in various sectors.

The proposal calls for a record high increase in the budget for R&D, with the aim to boost spending on research and development to drive future economic growth. The budget for R&D is increased by 19.3%, allocating 35.3 trillion won in 2026, a significant shift from the previous administration's cuts in R&D spending.

The budget for AI is significantly increased to 10.1 trillion won, up from 3.3 trillion won this year. Funds will be allocated for projects such as the purchase of 150,000 graphics processing units and talent cultivation.

Finance Minister Koo Yoon-cheol stated that the government will prioritize performance-based spending. To secure the necessary resources, the government has trimmed a record high 27 trillion won in non-core expenditures.

The government also plans to inject 1 trillion won in public finances next year and allocate a record high 2 trillion won to funds designed to help scale up promising small and venture firms.

Since taking office, President Lee Jae Myung has pledged to invest 100 trillion won by creating various investment funds over the next five years to elevate South Korea into one of the world's top three AI powerhouses. The private sector is expected to lead innovation, backed by comprehensive AI-focused government policies.

The 2026 budget proposal, according to Minister Koo, represents the government's commitment to fostering a vibrant and innovative economy, with a particular emphasis on AI as a core driver of economic growth. The increase in the budget is a sharp acceleration from a 3.2% on-year increase in 2025 and a 2.8% rise the previous year, indicating the government's dedication to driving South Korea's economic growth.

The South Korean government, with Choo Kyung-ho presenting the proposal, aims to boost spending on research and development and artificial intelligence to drive future economic growth. This proposal is set to steer South Korea towards a more innovative and technologically advanced future.

Expanding 2026 budget by 8.1% prioritizes reinforcement in research and development, artificial intelligence investments