Trend Global demand for Korea's key industries is capped by war, tariffs and high oil despite AI and emerging markets

Summary

KIET expects AI-centred investment and growth in emerging economies to lift demand in some industries during 2026. Overall demand growth is nonetheless limited by the US-Iran war, stronger US tariffs, high oil prices and slower global trade. Automobile demand is flat as slowdowns in the US and Chinese markets, tariffs and fuel costs offset growth in India, Russia and other emerging markets, while reduced policy support caps eco-friendly vehicles. Machinery demand weakens as US tariff uncertainty, a sharp drop in Middle East demand and higher energy and material costs curb global capital spending despite recovery in European and Chinese manufacturing. Global oil demand is expected to turn down on high prices and slower growth, and petrochemical demand is held back by Chinese supply expansion, weak construction and protectionism. By contrast, semiconductors, telecommunications equipment, batteries and biohealth retain structural or medium-term growth.