Economist urges South Korea to lock chip boom profits for future downturns
Laura Alfaro, chief economist at the Inter-American Development Bank, advised Seoul to earmark part of its semiconductor windfall in a stabilization fund to cushion future economic shocks.
At a press briefing held in the Four Seasons Hotel Seoul, Laura Alfaro, chief economist and economic counselor of the Inter-American Development Bank, endorsed South Korea’s plan to create a 162-trillion-won Future Response Fund. The fund aims to allocate surplus tax receipts generated by the semiconductor surge toward infrastructure projects while building a buffer against future revenue shortfalls. Alfaro stressed that such stabilization mechanisms can mitigate excessive currency appreciation and the destabilising effects of rapid capital inflows.
She also called for broader economic flexibility, including adaptable labor markets and government spending, to better weather downturns. Drawing on Korea’s experience during the Asian financial crisis and earlier semiconductor price shocks, she argued that reforms in exchange-rate policy and financial oversight have already enhanced the country’s resilience. Finally, Alfaro suggested deeper cooperation with Latin America to secure energy and mineral supplies for the AI-driven chip industry.
Why it matters
South Korea's chip earnings could fund a safety net that stabilises its economy against future downturns.
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