Korea – business sentiment worsens again

Business sentiment fell again in today's survey, and has now only been worse during the global financial crisis and covid. Exporter sentiment has ticked-down, but the weakness is much more apparent in domestic, non-manufacturing sectors. Further policy easing is ahead.
Korea – cycle worsening, rates to fall

The economic environment for Korea is about as bad as it can get. Despite the short-term rebound in house prices, that suggests more rate cuts, starting at this week's meeting, that will ultimately take the policy rate below neutral. The one caveat I have is the stickiness of services inflation.
Korea – employment sluggish even before the trade war

Unemployment in Korea remains low, but it is clear that the cycle low has been seen. Private sector business sentiment has been pointing to falling employment, and that even before the export recession that is highly likely in the next few months.
Korea – core inflation up again

With public services prices rising in March, the upwards drift in private services prices of recent months is now showing in core inflation. It still isn't high, but with business surveys suggesting some pressure on goods prices too, inflation is becoming more of a constraint on BOK action.
Korea – sentiment drops again

Business confidence remains extremely weak, and consumer confidence isn't a whole lot better. That being the case, the BOK is going to want to cut further, but inflation readings in the sentiment surveys aren't giving the all-clear for an aggressive loosening.
Korea – BOK remains dovish

Tuesday's minutes of the February meeting show concern about weak growth. The impact of higher $KRW on inflation was played down, and the committee didn't discuss the rising services prices that have worried me. Perhaps not surprisingly given rates were cut, household debt was back on the agenda.
Korea – activity weak, property inflation re-accelerates

There's no change in weak activity, and that even before Trump's reciprocal tariffs. The KRW has been stable, but the warning signs of a rebound in property have been accurate. The direction of policy rates is still down, but household debt issues will once again complicate the outlook for the BOK.