Every year in August KABC forecasts the future growth of Korea (and check on how we did last year.) In the Second Chance we have important updates to the forecast made on August 17. Notably BOK has issued a new economic outlook, Governor Rhee has spoken about Korea’s situation while keeping the interest rate constant, and Q2 Household Income and Expenditure survey shows that household income fell in Q2. Governor Rhee kept the GDP economic outlook at 1.4% for 2023 despite investment banks lowering the forecast to 1.1% (Our forecast is 0.9% to 1.2%). He lowered the expected growth rate for 2024 to 2.3% from 2.4%
This year we have a lot to discuss. In August 2023 the evidence is that Korea is running well behind its BOK forecast on an early view of Q3 data. This will have a likely knock on effect on 2024 growth as BOK now factored in. Further forecasts for the US economy are that while avoiding recession growth will remain historically low in 2024, while 70% of growth is forecast to occur in Asia, dynamically affecting export markets.
Essentially Korea needs to retain space to deal with China economically in its own national interest and not that of the US administration and Congress. Successfully achieved Korea becomes a platform for both US and Chinese investment. But pressure will rise on allied nations to toe the US line on dealing with China and there is a lot of room for an extra burden. 2024 will be a rough year politically in the US with the possibility that Trump will be returned in the November elections and take office in January 2025.
Korea also has an important general election set for April 2024 in which the President hopes that his party will take control of the National Assembly and set the scene for changes in the last three years of his administration. If this is not achieved a new consensus on what is important will be required.
Korean business will continue to have to adapt to changing geopolitics. The session will end with a list of key dates where events will determine the trajectory of the Korean economy.
Join us to debate all these issues and create new ideas for engaging in the Korean market either online. Our website www.kabcltd.com has the programme for the rest of the year. Because of important changes you will want to download this report even if you cannot attend.