Economy News
Reporting, analysis, and commentary on economy from Breeze in Busan.
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South Korea Faces Persistent High Inflation Amid Climate Change
Seoul, South Korea — South Korea is grappling with the prospect of entrenched high inflation, driven not just by temporary economic pressures but by a deepening structural crisis exacerbated by climate change. The government's optimistic forecast for inflation stabilization appears increasingly out of reach as consumer prices continue to rise. The Korean economy faces a perfect storm of high exchange rates and interest rates, pushing up production costs and fueling inflation. Despite government
2 min read
South Korea's Struggle for Economic Stability
In recent weeks, South Korea's economic landscape has been marked by a significant uptick in volatility, driven by a combination of external geopolitical tensions and internal economic indicators. The Won-Dollar exchange rate recently surged, touching the 1,400 KRW mark for the first time in nearly 17 months, a level not seen since the tumultuous days following the U.S. Federal Reserve's rate hikes in November 2022. This economic indicator is crucial as it reflects broader global influences, inc
4 min read
South Korea's Fiscal Deficit Widens Despite Spending Cuts
In a startling revelation, South Korea's fiscal deficit for the past year surged nearly 29 trillion KRW beyond initial projections, despite significant reductions in government expenditures. This financial conundrum stems from overly optimistic tax revenue forecasts, resulting in a historic shortfall that reached a staggering 59 trillion KRW. The latest '2023 Fiscal Year National Settlement' report uncovers a fiscal landscape fraught with challenges, as planned cutbacks in spending failed to bri
5 min read
South Korea's Economic Strategy Amidst U.S. Interest Rate Speculations
In a recent statement that has stirred conversations in both domestic and international economic circles, President Biden expressed his anticipation that the Federal Reserve would implement interest rate cuts before the end of the year, despite a surprising re-acceleration in price growth across the U.S. economy. This prediction comes at a time when inflation rates, though receding from their peak, continue to pose a challenge to economic stability and growth. Biden's comments were made during a
7 min read
Addressing South Korea's Economic Divide: The Need for More Large Enterprise Jobs
In a recent report by the Korea Development Institute (KDI), a stark revelation was made concerning the job market in South Korea, particularly highlighting the distribution of jobs by business size. South Korea stands out within the Organization for Economic Co-operation and Development (OECD) with the lowest proportion of jobs provided by large enterprises. This statistic is not just a number but a reflection of underlying economic and social challenges facing the nation. The report suggests t
4 min read
Federal Reserve Holds Steady on Interest Rates, Signals Future Cuts
In a pivotal policy meeting, the Federal Reserve has taken a stance that has sent ripples through the financial world. On January 31, 2024, the Fed announced its decision to maintain the benchmark interest rate at the range of 5.25%-5.50%, a status quo maintained since July of the previous year. This decision comes at a crucial juncture, marked by ongoing economic adjustments post-pandemic and evolving global financial landscapes. The Fed's announcement, while keeping rates steady, also hinted a
2 min read
Global Financial Markets React as U.S. Treasury Yields Surge and Korean Central Bank Holds Rate Steady
In a rapidly evolving financial landscape, U.S. Treasury yields surged on Wednesday, signaling heightened investor concerns about the direction of Federal Reserve's interest rates and the latest economic indicators. The 10-year U.S. Treasury yield climbed to 4.908%, a peak not witnessed since 2007, marking a significant jump of roughly 6 basis points. Concurrently, the 5-year Treasury yield ascended to its highest since 2007 at 4.937%, while the 2-year remained stable at 5.22%, a level reminisc
3 min read
IMF Adjusts South Korea's Economic Growth Projection
Seoul- Amid a backdrop of mounting global economic challenges, South Korea finds itself in a complex economic predicament. While the International Monetary Fund (IMF) has held its 2023 growth outlook for the nation steady at 1.4%, projections for the subsequent year indicate a significant downturn. IMF's Projections for South Korea The IMF's recent assessment echoes its July forecast for South Korea's 2023 economic growth, reflecting persistent obstacles in the global economic landscape. This
2 min read
South Korea at an Economic Crossroads: The Confluence of US Monetary Policy, Structural Challenges, and Global Rankings
South Korea, once hailed as one of the top 10 economies by nominal GDP, has recently witnessed a decline in its global standing. Last year, the country's nominal GDP was provisionally ranked 13th worldwide, failing to secure a spot in the top 10 for three consecutive years. As South Korea confronts the challenges posed by global economic dependencies, the implications of the US Federal Reserve's actions, and its internal structural and energy hurdles, the nation's resilience is once again put to
5 min read
South Korea's Economic Outlook Faces Downward Adjustment Again, Defying Global Growth Trend
In a striking deviation from the global norm, the International Monetary Fund (IMF) has for the fifth time since July of the previous year, slashed its forecast for South Korea's economic growth rate for 2023 to 1.4%. This move diverges from the IMF's broader perspective, which has seen a 0.2% increase in the global economic growth forecast this year. As the world navigates its way out of recession, South Korea's persistent pattern of sluggish growth is undermining the government's anticipations
2 min read
The Depreciation of the Yen and Its Implications on the South Korean Economy
In the interconnected world of global finance, the shifting tides of currency values often bring about far-reaching ripple effects. At the heart of these financial undercurrents, the foreign exchange market – the world's largest financial market – sees a dynamic and intricate dance of fluctuating currency values. In the case of South Korea, an export-driven economy with close ties to its neighbors, shifts in the value of the Japanese yen can bear significant consequences. Understanding Cross Ra
2 min read
Steering the Driverless Economy: The Impact of Aging on South Korea's Economy
As the world navigates the remnants of the global COVID-19 pandemic, South Korea finds itself caught in a confluence of economic headwinds. Known for its 'Miracle on the Han River', South Korea transformed from one of the poorest countries in the world to an advanced high-income economy in just a few decades. Today, it stands as a global leader in technology, automotive, and electronics, boasting brands like Samsung and Hyundai. However, the current economic scenario within its borders has raise
11 min read