South Korea pledged on Friday to make artificial intelligence the centerpiece of its economic policy, even as the government sharply cut its growth forecast for this year, citing trade pressures from U.S. tariffs.

In its first bi-annual economic policy blueprint under President Lee Jae Myung, the finance ministry said it will roll out policy packages in the second half of 2025 to back 30 major AI and innovation projects. These range from robotics, autonomous cars and semiconductors to drones, smart factories, advanced materials, and cultural exports like “K-beauty” and “K-food.”

“A grand transformation into AI is the only way out of growth declines resulting from a population shock,” the ministry said, pointing to the country’s record-low birthrate.

The government plans to pair financial support with tax incentives and regulatory reforms, while establishing a 100 trillion won ($71.6 billion) fund with the private sector to channel investment into strategic industries.

The goal, officials said, is to lift South Korea’s potential growth rate from the current 2% to 3% and secure a place among the world’s top three AI powers. Without intervention, growth could slip below 1% by the late 2040s.