The economic environment in 2024 as seen by the Bank of Korea… “Growth is improving, real estate PF risk potential”
Article entered 2023-12-30 21:00:00
Article modified 2023-12-30 11:36:35
The Bank of Korea predicted that the improvement in growth of our economy will continue next year. The inflation rate is also expected to fall by about 1 percentage point compared to this year. While relatively better economic conditions are expected than this year, real estate project financing (PF) risk was diagnosed as a variable.
The Bank of Korea mentioned this in its recently announced ‘2024 Monetary and Credit Policy Operation Direction’ while predicting the overall economic situation for next year.
Citizens wear thick clothes and go to work near Gwanghwamun Square in Jongno-gu, Seoul. yunhap news
It is expected that the domestic economy will continue to show improvement in growth next year due to the continued recovery in exports. Previously, the Bank of Korea presented next year’s economic growth rate at 2.1% in its revised economic outlook last month. The growth rate forecast for this year is 1.3%. In the case of consumption, pent-up demand (a phenomenon in which suppressed demand is rapidly revived) has been exhausted, and the recovery trend is expected to be gradual due to the impact of monetary tightening. It is expected that exports and facility investment will continue to improve due to the rebound of the semiconductor economy and increased investment in new growth industries in major countries.
The growth rate in the number of employed people was expected to slow, especially in the service sector. It is expected that the number of people will increase by 250,000 and 220,000 in the first and second half of next year, respectively, recording a smaller increase than this year (370,000 and 300,000). It is expected that the pace of slowdown will be gradual as the labor supply of women and the elderly continues. The unemployment rate is expected to rise slightly due to slowing growth in the number of employed people.
Next year’s consumer price inflation rate is expected to fall to the mid-2% range, and the core price inflation rate is expected to fall to the low-to-mid 2% range. In its economic outlook last month, the Bank of Korea predicted next year’s inflation rate to be 2.6%. The Bank of Korea said, “Domestic prices will continue to trend downward due to weakening price pressure on the demand side, but the pace of slowdown will be gradual due to the passing of the accumulated cost increase pressure to prices,” adding, “Downside risks include deepening slump in demand at home and abroad.” “(Risk), the strengthening of the ripple effect of cost pressure has the potential to be an upside risk.”
In 2023, consumer prices showed an upward trend in the mid-3% range, continuing the trend of high prices. The photo shows citizens shopping at a large supermarket in downtown Seoul on the 29th. yunhap news
The financial and foreign exchange markets were expected to continue a generally stable trend. However, it is expected that volatility may increase from time to time depending on the development of internal and external risk factors. Foreign currency liquidity is expected to continue a generally stable trend due to the possibility of an end to global monetary tightening, good external soundness, and improvement in the current account balance.
While next year’s economy is expected to show relatively better indicators than this year, such as improving economic growth rate and slowing prices, the Bank of Korea cited poor real estate project financing (PF) as a potential risk in next year’s economic situation.
Commenting on the financial system environment next year, the Bank of Korea warned, “It will generally remain stable, but there is a potential for liquidity and credit risks related to real estate PF, etc. to materialize.”
Recently, Taeyoung Construction has entered a workout (corporate structure improvement) process, raising concerns about a string of bankruptcies among construction companies, which are believed to be a variable in next year’s economic situation.
Construction is underway at an apartment complex construction site in Seoul. News 1
In addition, it is expected that as the high interest rate level continues for a long period of time, the debt repayment ability of marginal companies and vulnerable households may decrease.
It is expected that financial institution loans will increase in size, centering on household loans. The increase in household loans is expected to expand, centering on bank housing-related loans, but it is expected that corporate loans will show an increase similar to this year due to risk management for vulnerable sectors of non-bank financial institutions.
2023-12-30 12:00:00
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