On the 1st, export-import containers were piled up at the Shinseondae Pier yard in Nam-gu, Busan. According to the International Financial Center on the 4th, major global investment banks (IB) slightly raised their forecasts for South Korea’s real GDP growth rate for this year for the first time in 16 months. The growth rate forecast for Korea submitted by eight major IBs worldwide increased from an average of 0.8% at the end of May to 0.9% at the end of last month, marking a 0.1 percentage point rise.
Specifically, Barclays adjusted its forecast from 1.0% to 1.1%, Bank of America (BOA) from 0.8% to 1.0%, and UBS from 1.0% to 1.2%. Goldman Sachs (1.1%), Nomura (1.0%), HSBC (0.7%), Citibank (0.6%), and JP Morgan (0.5%) maintained their previous forecasts. This adjustment in the average growth rate forecast for Korea by IBs is the first since February of last year (from 2.1% to 2.2%).
The slight upward revision in Korea’s growth rate forecast is believed to be due to the combined effects of domestic and international factors, such as political stability following the new government’s inauguration, increased growth through expansionary fiscal policies, eased U.S.-China trade tensions, and a slowdown in Middle East conflicts.
Regarding this, Bank of Korea Governor Lee Chang-yong stated in an interview with foreign media on the 1st of this month that the supplementary budget package would have an effect of raising this year’s growth rate by about 0.2 percentage points.
The critical issue is the pace of the base rate cut in alignment with the real estate market. There is an outlook that if the Bank of Korea’s base rate cut is slower than expected due to the recent fluctuations in the real estate market, the activation of the Korean economic situation will also be slightly delayed accordingly.
In a recent report to the National Planning Commission, the Bank of Korea mentioned, “There is a possibility that household loans may surge between August and September,” and it will “carefully decide the timing and speed of additional rate cuts to ensure that excessive rate-cut expectations do not stimulate an increase in housing prices.”