Korea

Research evidence excerpt

Korea

While 2Q GDP is expected to deliver pay- even though the pace has moderated from the exceptionally

back from the unsustainably strong 1Q print, the available strong end-1Q surge. Based on J.P. Morgan’s seasonal adjust-

indicators suggest the slowdown is likely to be milder than ment, the June export volume index rebounded sharply by

widely expected. A stronger growth trajectory, in turn, will 10.4% m/m, sa, lifting the three-month trend growth rate to

create upside risks to the policy path. 19.1% ar by quarter-end. This is clearly slower than the

50.3% pace seen at the end of 1Q, but still represents a firm

BoK starts the hiking cycle real-side print (Figure 2). Together with record-high nominal

customs exports in June, the data suggest that the tech-led

The Bank of Korea raised its policy rate by 25bp at the July

export cycle remains powerful, with both price and volume

MPC meeting, as signaled in May, marking the start of a

still contributing, although price effects continue to play an

tightening cycle after a 13-month pause. The decision itself

important role. Trade price data reinforce this message: tech

offered limited new quantifiable guidance: there was no dot

export prices rose strongly again in June, while the decline in

plot, no dissenting vote, and the hawkish policy statement

energy import prices helped relieve cost pressures and kept

was broadly in line with expectations. However, the Gover-

the broader terms-of-trade uptrend intact for 1H.

nor’s press conference reinforced that every meeting in the

coming months should be treated as live, with policy calibrat-

Figure 2: Customs exports in USD vs. exports volume index

ed closely to incoming data.

%3m/3m, saar

Figure 1: Real GDP growth path - JPM vs. BoK USD value

%oya 120

6 90 Volume JPM forecast