South Korea parliament clears 2026 budget to power AI-led growth

South Korea has one of the lowest debt burdens among developed nations, but its debt-to-GDP ratio has been climbing. South Korea's parliament approved a 727.9 trillion won ($495.8 billion) budget for next year on Tuesday, endorsing President Lee Jae Myung's sweeping plan to revive the economy through aggressive investment in artificial intelligence and other strategic sectors. The outlay represents an 8.1% increase from this year's initial budget plan and will increase at a rate more than triple the pace of expansion of the 2025 budget. The acceleration comes as the country confronts U.S. tariff pressure and growing welfare costs associated with one of the world's fastest-aging populations. Lee has vowed to transform Korea's industrial base, defense capabilities and public services by more than tripling AI-related investment to 10.1 trillion won next year.