In announcing a surprise rate cut on Thursday, South Korea’s central bank mentioned the yen only once in a statement of 523 words.
Governor Kim Choong-soo and his colleagues were probably just being polite in not pointing the finger at Tokyo. But it’s likely that the Japanese currency’s plunge on the forex markets looms much larger in their minds that the word-count suggests. Just look at the chart: perhaps Seoul might have held fire if the yen-won rate had stabilised in April. The latest drop in the Japanese currency may have pushed the central bank into action. Continue reading »
The weaker yen is slowly hampering South Korea’s growth momentum, with the country’s industrial output falling 2.6 per cent in March from February.
The latest data marked a fall for a third straight month, clouding the country’s economic outlook. Industrial production fell 3.0 per cent last month from a year earlier, severely undershooting market estimates, as labour unions at Hyundai Motor, the country’s largest automaker, refused to work on weekends. Continue reading »
Faltering exports, war threats, China slowdown, low inflation and a stalling economy, and a new government keen to promote growth: Korea’s central bank had a huge range of reasons to cut rates at its last couple of meetings.
But Thursday’s GDP data has vindicated the recent decisions to hold. Quarter on quarter growth was 0.9 per cent – it might not sound like much, but that’s the highest for two years. Continue reading »
South Korea’s $15.4bn supplementary budget is expected help shore up the country’s short-term economic growth, but the long-awaited measures may not be enough to boost the country’s long-term growth potential.
The bigger-than-expected extra budget was unveiled on Tuesday to much fanfare with finance minister Hyun Oh-seok predicting that it will help drive up the country’s growth rate to about 3 per cent in the second half. Continue reading »
By Song Jung-a and Stefan Wagstyl
War threats or no war threats, the Bank of Korea is keeping a cool head.
Despite the crisis with the North and political pressure for rate cuts to boost flagging growth and push down the won in response to the yen shock, the central bank on Thursday left its policy rate unchanged at 2.75 per cent. But for how long it can resist the calls for cuts is moot. Continue reading »
South Korean government officials are flirting again with the idea of introducing taxes on financial transactions to curb rapid capital flows in and out of Asia’s fourth-largest economy.
Eun Sung-soo, director general at the finance ministry, told reporters on Wednesday that the government was considering “various” financial taxes to reduce volatility in capital flows and could strengthen existing capital control measures, if needed. Continue reading »
South Korea’s protracted housing slump is causing a headache to its new government. President Park Geun-hye faces a challenge in boosting stagnant property prices, which has been holding back domestic consumption in Asia’s fourth-largest economy.
South Korea’s house prices have been flagging for the past two years and are showing no signs of recovery this year with the economy forecast to grow only 2.8 per cent after last year’s estimated 2.0 per cent expansion. Continue reading »
Not this time – maybe next. The Bank of Korea on Thursday left interest rates unchanged at 2.75 per cent for a fifth consecutive month, despite slowing economic growth and low inflation. Continue reading »
South Korean companies are facing growing public pressure to convert contract workers to permanent staff amid increasing calls for a so-called “economic democratisation,” which is likely to improve workers’ conditions at the price of increasing employers’ costs.
The latest response to this pressure came from E-Mart, the country’s biggest supermarket chain, which said last week it would convert 10,000 temporary salespeople to regular staff from April 1. Continue reading »
Foreign investors are returning to South Korea after heavy sell-offs in January, attracted by expected foreign exchange gains with the won stregthening against the dollar.
Net foreign investment in South Korean bonds rose by Won3.53tn in February, the highest monthly increase since October 2010. Foreign holdings of local debt stood at a record Won93.7tn as of end-February. Continue reading »
South Korea’s inflation unexpectedly slowed last month on weak domestic demand, despite a pickup in manufacturing activity, giving room for the Bank of Korea to cut interest rates further.
But will the central bank do so at its next meeting on March 14? Most economists seem to think not. Continue reading »
South Korean banks’ outstanding loans to households posted the biggest monthly fall on record in January – seemingly good news for policy makers seeking to rein in the country’s huge household debt.
But the data highlight a dilemma for the authorities, because the falling household loans could also have a depressing effect on the country’s sluggish property market. Continue reading »
South Korea’s big retail chains have been feeling gloomy in recent months, as low consumer confidence has squeezed their margins. And growing political pressure is giving them further cause for concern.
On Tuesday, the National Commission for Corporate Partnership, a panel that advises the government on business policy, recommended that companies with more than Won20bn in sales should not enter retail sectors including used cars, magazines, flowers, bicycles, or most sorts of restaurants. Continue reading »
South Korea’s exports fell unexpectedly in December but the government insists the economy is recovering.
Exports, which make up about half the nation’s economy, dropped 5.5 per cent in December from a year earlier after two months of expansion, renewing concerns about the country’s economic outlook. But the government attributed the fall to fewer working days and stressed that the economic recovery was on track, as average exports on working days still increased 7.6 per cent last month. Continue reading »
It’s the exports, of course. Korea’s current account registered a record surplus of $6.88bn in November, up from $5.78bn in October, and beating July’s previous record of $6.14bn.
The trade strength pushed the won to appreciate around 0.45 per cent against the dollar on Friday, at around 1,067.6 per USD, continuing the rally from May. Continue reading »