Korea’s industrial production growth picked up in December, pointing to mighty export growth. President Lee has signaled a potential supplementary budget to support various sectors, which could pose risks to Korea’s economic growth. The KRW has strengthened against the dollar this week, reflecting positive sentiment, note Lin Li, director of Asia Global Markets Research, and Khang Sek Lee, research fellow at MUFG Bank.

Focus on additional budget potential

“In addition, President Lee continued to signal that an additional budget may be introduced this year, in part to support the arts and culture sector and the new startup incubator initiative.”

“While it is unclear whether it will ultimately be financed by the KTB issuance or whether it will raise tax revenues, it certainly poses some upside risks to economic growth in Korea and justifies the BoK’s recent move to a neutral stance.”

(This article was created with the lend a hand of an artificial intelligence tool and has been reviewed by an editor.)