Economy News
Reporting, analysis, and commentary on economy from Breeze in Busan.
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Economic Turmoil Deepens: Rising Foreclosures and Political Unrest Shake Markets
South Korea is navigating a perfect storm of economic and political instability as a surge in property foreclosures coincides with rising financial market volatility. November 2024 saw a record-breaking 4,865 foreclosure filings, the highest in over three years, while political unrest has driven the won-dollar exchange rate to its highest level in 15 years. With households and investors alike grappling with the fallout, the country faces mounting pressure to stabilize its economy. The number of
2 min read
From Clothing to Transport: Where Koreans Cut Back Most
South Korea's economy is sending troubling signals as middle-aged households, a vital backbone of the nation's economic activity, face unprecedented financial strain. The third quarter of 2024 saw a historic decline in business income for households led by those in their 40s, a demographic traditionally considered economically stable and robust. According to Statistics Korea’s latest report, the average household income rose by 4.4% year-on-year to 5.26 million KRW. However, a deeper analysis r
3 min read
Korea’s Interest Rate Cuts: Bold Move or Risky Gamble?
Seoul, South Korea - In a surprising turn, the Bank of Korea (BOK) recently reduced its benchmark interest rate by 0.25 percentage points for the second month in a row, bringing it to 3.0% from 3.25%. This move marks the first consecutive rate cut since the 2008 global financial crisis. The decision reflects growing concerns over Korea’s sluggish economy and underscores the urgency to stimulate domestic demand and avert further economic decline. However, this bold policy shift raises pressing qu
4 min read
South Korea’s Retail Sales Slump and Elderly Labor Surge
Imagine an economy where spending stalls for nearly three years, and the fastest-growing workforce is retirees forced to return to jobs. This is not a hypothetical scenario but the reality in South Korea today. A historic 10-quarter decline in retail sales has left small businesses struggling, while the government celebrates a record-high employment rate—driven largely by elderly workers unable to retire due to financial insecurity. Official narratives proclaim recovery, citing GDP growth and
10 min read
Global Rate Cuts and South Korea’s Economic Challeng
In response to evolving global economic conditions, central banks worldwide have recently implemented interest rate reductions aimed at sustaining economic growth and stabilizing inflation. The U.S. Federal Reserve, the Bank of England, and the Bank of Korea have each taken notable actions, though with different economic considerations and results. This analysis delves into the impacts of these policies, with particular focus on South Korea’s unique economic landscape and the challenges arising
4 min read
How the U.S. Fed’s 2024 Rate Cut Affects South Korea’s Economy
In September 2024, the U.S. Federal Reserve slashed interest rates by 50 basis points, marking its first rate reduction in four years. The Fed’s decision, aimed at stabilizing inflation and addressing rising unemployment, is part of an ongoing effort to stimulate the U.S. economy amidst cooling price increases. However, this policy shift is having significant ripple effects globally, especially in economies like South Korea, which now faces critical decisions about its own monetary strategy. Th
3 min read
Is South Korea Facing a Prolonged Recession?
As South Korea grapples with rising inflation and a slowing economy, signs are emerging that the nation may be on the cusp of a prolonged economic downturn. Nowhere is this more evident than in the restaurant industry, where closures have surged, and businesses struggle to stay afloat. The once-thriving sector, which had been a cornerstone of the country's vibrant social life, is now shrinking under the weight of increased operational costs and shifting consumer behaviors. Recent data reveals a
10 min read
Bank of Korea Holds Interest Rate at 3.50%, Signals October Cut
Seoul, South Korea - The Bank of Korea (BOK) has once again opted to maintain its key interest rate at 3.50%, a decision that marks the 13th consecutive rate hold since early 2023. This cautious approach comes amidst a backdrop of easing inflation, persistent household debt, and modest economic growth. As the BOK signals a potential rate cut in the near future, possibly as early as October, the implications for South Korea’s economy and its citizens are profound. The BOK's decision to keep the
2 min read
U.S. Recession Fears Rise as Sahm Rule Signals Economic Concerns
Amidst increasing signs of economic slowdown, the United States faces rising fears of a recession. The activation of the Sahm Rule, an indicator of economic downturns, has intensified scrutiny from economists and policymakers. The potential implications of this economic uncertainty are far-reaching, notably affecting South Korea, a significant trading partner of the U.S. Recent economic data from the U.S. show troubling signs. In July 2024, the economy added just 114,000 jobs, while the unemplo
2 min read
Adapting to Change in Busan's Retail Industry and Self-Employment Crisis
Busan, a city known for its energetic commerce and bustling local businesses, is undergoing a significant transformation. The Covid-19 pandemic has accelerated a shift towards online shopping, leading to the closure of numerous major retail outlets and a dramatic decline in self-employment. Recent statistics underscore a deepening 'self-employment crisis,' rooted in stagnant household wage income and the burdensome repayment of household debt, which has resulted in prolonged sluggishness in dome
7 min read
Rising Trend of Unsold Completed Homes in South Korea
The South Korean housing market is facing a significant challenge with the continuous increase of unsold completed homes, commonly referred to as "malicious unsold homes." These properties, which remain unsold despite being fully constructed, have been on an upward trend for the past ten months, creating considerable burdens for the construction industry. According to the Ministry of Land, Infrastructure, and Transport's May housing statistics, there were 13,230 unsold completed homes across th
3 min read
Japan's Economic Shift: Deflation to Digital
In a landmark shift from its longstanding economic policy, Japan's central bank has recently ended its era of negative interest rates, a policy that had been in place since 2016. This change marks a pivotal moment for Japan as it grapples with various economic challenges, from wage stagnation to a weakening yen. The Bank of Japan’s (BOJ) decision to raise short-term interest rates to 0-0.1% aims to stimulate growth and stabilize the economy. However, this move brings with it a complex array of i
6 min read