APAC Economic Perspectives "Korea: is this time different?" Deng

Research evidence excerpt

APAC Economic Perspectives "Korea: is this time different?" Deng

Global Research

12 May 2026ab

APAC Economic Perspectives Economics

AsiaKorea: is this time different?

William Deng

Economist

Robust growth momentum william-w.deng@ubs.com

+852-2971 6765

Exports—more specifically, tech and computer memories exports—continued to

perform well into 2Q (Figure 1-3) despite significant uncertainties due to the shocks Yong-Suk Son, CFA

Analystfrom the Strait of Hormuz (SoH). As released earlier, Korea’s 1Q26 GDP expanded by

yongsuk.son@ubs.com

1.7% q/q, sa—the strongest sequential expansion since 3Q20—with significant +82-2-3702 8804

acceleration in real sequential export expansion as the key driver. The latest trade data

suggests that this strong momentum has carried over. In addition, after an initial Nicolas Gaudois

Analyst

moderation in March, the manufacturing PMI rebounded in April, outperforming most

nicolas.gaudois@ubs.com

peers in Asia (Figure 11). On the other hand, like Taiwan and many other economies we +65-6495 5148

track, consumer confidence appears to be suffering the most apparent deterioration

(Figure 16). The fragile recovery path in private consumption could face further Yoon Cho

challenges ahead.

yoon.cho@ubs.com

+82-2-3702 8805

Much better inflation management so far

Korea is more vulnerable to energy price shocks compared to its Asian peers, based on

our earlier analysis. During the 2022 Russia-Ukraine war energy shock, Korea’s inflation

surged more than that of peers (e.g., Taiwan), partly due to a stronger direct

transmission into domestic utility prices. For instance, in 2022, Korea raised headline

electricity tariffs three times, resulting in a cumulative increase of around 20%, while the

average increase in Taiwan was only about 8.5%.