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Korean Issues Timeline
July
1st
South Korea’s Exports Top $100 Billion in a Single Month for the First Time
South Korea’s exports reached a record $102.25 billion in June, up 70.9% year on year and surpassing $100 billion in a single month for the first time. Semiconductor exports totaled $44.82 billion, driven by rising demand and prices for high-performance memory amid increased AI investment. Exports of automobiles, steel, and cosmetics also increased. The monthly trade surplus reached a record $36.15 billion. South Korea ranked fifth globally in exports from January to April this year, overtaking Japan. The government said the country’s prospects of achieving $1 trillion in annual exports had improved, while identifying U.S. protectionism, international oil prices, and semiconductor price volatility as potential challenges.
16th
Bank of Korea Raises Policy Rate for First Time in 3.5 Years
The Bank of Korea’s Monetary Policy Board unanimously raised the policy rate by 0.25%p, from 2.5% to 2.75%. The increase, the first since January 2023, came as consumer price inflation exceeded 3% for the second consecutive month. The decision reflected the effects of a weak won and high oil prices, as well as demand-side inflationary pressures stemming from the semiconductor boom. Resilient exports, investment, and consumption were also cited as reasons for the increase. The Bank of Korea said it would continue to monitor household debt growth and housing prices in the Seoul metropolitan area, and would continue to take appropriate measures until it was confident that inflation was converging sustainably toward its target.
27th
Won Strengthens as Yen Weakens, Highlighting Diverging Currency Trends
Won Strengthens as Yen Weakens, Highlighting Diverging Currency Trends
Between the end of June and July 24, the Korean won appreciated 5.84% against the U.S. dollar, the largest gain among major currencies, while the Japanese yen depreciated 0.93%. Factors supporting the won included the inflow into South Korea of $25.6 billion raised through SK hynix’s U.S. listing of American Depositary Receipts (ADR), dollar sales by exporters, and a shift by foreign investors to net buying of Korean equities. Expectations for stronger Korean economic growth and further interest rate increases were also seen as contributing factors, while Japan’s weak growth and expectations of a slower pace of rate hikes were cited as reasons for the yen’s depreciation. Experts forecast that the divergence would persist in the near term, but suggested the won’s appreciation could slow from August onward, when most of SK hynix’s dollar-selling activity was expected to be complete.
28th
For the First Time, Foreign Tourist Arrivals Surpass 10 Million in the First Half of the Year
For the First Time, Foreign Tourist Arrivals Surpass 10 Million in the First Half of the Year
According to the Ministry of Culture, Sports and Tourism, the number of foreign tourists visiting South Korea exceeded 10 million in the first half of the year for the first time. China accounted for the largest number of visitors (560,000), followed by Japan (360,000), the Americas (210,000), and Taiwan (190,000). Domestic spending by foreign visitors also increased significantly. An analysis by the Korea Tourism Organization of foreign card spending data from the Korea Tourism Data Lab found that foreign tourists spent KRW 2.1222 trillion in May. This was the first time monthly spending had exceeded KRW 2 trillion since records began in January 2018, representing a 67.1% increase from the same month last year. Despite external pressures, including higher fuel surcharges amid tensions in the Middle East, strong interest in Korean culture, a weaker won, and high-quality tourism infrastructure were seen as supporting demand for travel to South Korea.
August
5th
Foreign Exchange Reserves Rise for Second Consecutive Month
Foreign Exchange Reserves Rise for Second Consecutive Month
South Korea’s foreign exchange reserves rose for a second consecutive month to $427.95 billion at the end of July. The increase was driven by new issuance of foreign currency-denominated Foreign Exchange Equalization Fund bonds, investment income on foreign currency assets, and a rise in the U.S. dollar value of assets denominated in other currencies as the dollar weakened. The monthly gain also accelerated, from $370 million in June to $590 million in July. By asset type, securities accounted for the largest share at 88.8% of total reserves, while deposits increased by $860 million from the previous month. Special Drawing Rights (SDRs) and the International Monetary Fund (IMF) reserve position, which represents funds available for withdrawal from the IMF when needed, also increased, while gold holdings remained unchanged. South Korea’s global ranking by foreign exchange reserves rose three places, from 13th to 10th.
21st
Government Plans to Establish Future Response Fund Worth KRW 100 Trillion
The government announced plans to establish a Future Response Fund to strengthen the country’s future growth potential by promoting AI and advanced industries and supporting young people. The fund will accumulate “additional tax revenue” – defined as tax receipts above the average growth trend over the past decade - rather than spending such temporary revenue windfalls in a single year, thereby building resources for future investment. The plan also envisions managing surplus funds and transferring them to the general account when tax revenues fall short, helping cushion fiscal volatility. Although the exact amount allocated will depend on revenue projections and other factors, the fund is expected to exceed KRW 100 trillion.
The government plans to invest through the fund in four areas: youth, growth engines, regional development, and education and talent. Support will include AI and advanced industries, power and water infrastructure, and jobs and housing for young people. However, concerns have been raised that funding could decline if semiconductor market conditions change and that flexible spending arrangements could weaken legislative oversight.
27th
Bank of Korea Raises Policy Rate for Second Consecutive Month
The Bank of Korea’s Monetary Policy Board raised the policy rate from 2.75% to 3.0%, marking a second consecutive monthly increase. Six of the seven board members voted in favor. With economic growth forecast at 3.3% for the year, the BOK judged that inflation would remain above its target for a considerable period, with core inflation rising to 2.6% in July. The decision also reflected efforts to curb rising housing prices in the Seoul metropolitan area, rein in household debt growth, and stabilize the exchange rate. Governor Hyun Song Shin explained that acting preemptively would help stabilize inflation expectations and reduce the need for more prolonged or aggressive tightening later. The median projection for the policy rate six months ahead was 3.25%. The BOK plans to assess the effects of consecutive rate increases and moderate the pace of further hikes.
September
1st
The Korean Government Proposes KRW 821 Trillion Budget for Next Year, Allocating KRW 63 Trillion to Future Growth
The Korean government approved its proposed 2027 budget of KRW 820.9 trillion at a Cabinet meeting, an increase of KRW 93 trillion, or 12.8%, from this year’s initial budget. This marks the first time total government expenditure in a proposed budget has exceeded KRW 800 trillion.
Building on increased tax revenue from the semiconductor boom, the government aims to strengthen industrial capabilities and raise the potential growth rate by investing in future growth sectors, thereby expanding fiscal capacity. To this end, it has allocated KRW 62.8 trillion to develop future growth engines, including the promotion of advanced strategic industries beyond semiconductors, the energy transition, and support for startups, culture, and SMEs. A further KRW 43.3 trillion will go toward supporting young people at different stages of their lives, while KRW 21.3 trillion will be allocated to three megaprojects involving semiconductors, physical AI, and AI data centers, as well as broader AI initiatives. Other key allocations include KRW 117.1 trillion to address K-shaped economic polarization and KRW 38.3 trillion for public safety and peace, including the development of nuclear-powered submarines and the mass production of the KF-21 Korean fighter jet. The proposed budget will be finalized after review by the National Assembly’s standing committees and Special Committee on Budget and Accounts, followed by a plenary vote.
The Korean Government Proposes KRW 821 Trillion Budget for Next Year, Allocating KRW 63 Trillion to Future Growth
1st
Bank of Korea Revises News Sentiment Index as Economic Sentiment Remains Above 100 in August
The Bank of Korea’s new News Sentiment Index (NSI) for August stood at 106.47, up 4.64 points from the previous month and above the benchmark of 100 for the fifth consecutive month. The index uses an AI language model to analyze sentences in economic news articles. A reading above 100 indicates that sentiment reflected in the articles is more optimistic than the historical average. The index fell to 92.88 in March, when the Middle East war broke out this year, but rebounded from April. Starting in September, the BOK will publish a revised index that analyzes articles more closely related to the domestic economy and uses a daily sample of 20,000 sentences, double the previous 10,000. The revised index will also distinguish between current and future-oriented news to measure economic sentiment by time frame.
6th
Strong Semiconductor Exports Highlight Need to Diversify Products and Markets
South Korea’s exports totaled $693.3 billion from January to August, up 52.8% year on year, raising expectations that annual exports could reach $1 trillion and the country could become the world’s fourth largest exporter. Driven by increased AI investment, semiconductor exports surged 169.6%, accounting for 74% of the total increase in exports. Exports excluding semiconductors also rose 18.0%, but passenger car exports fell 4.4%, the steepest decline in six years. This was partly due to increased production in the United States in response to U.S. tariffs. Exports to the United States rose by a record 57.0%, although concerns have emerged that the widening trade surplus could prompt additional U.S. trade pressure. With dependence on semiconductors increasing and exports heavily concentrated in the U.S. and Chinese markets, calls are growing for greater diversification.
September
8th
South Korea Expected to Surpass $40,000 in Per Capita Gross National Income
Economic growth and rising incomes amid the semiconductor boom have increased the likelihood that South Korea’s per capita gross national income (GNI) will exceed $40,000 this year. According to the Bank of Korea, nominal GNI rose 21.8% year on year in the first half, while nominal GDP in the second quarter increased by 26.4%, its fastest growth rate in 47 years. Higher corporate profits driven by strong semiconductor exports, a booming stock market, and rising export prices boosted both nominal GDP and GNI. The BOK noted that per capita GNI was highly likely to exceed $40,000 if nominal GNI growth and exchange rate stability continued. If achieved, South Korea would join the group of countries with populations exceeding 50 million and per capita income above $40,000, following the United States, Germany, the United Kingdom, France, and Italy.
23rd
OECD Raises South Korea’s Growth Forecast to 3.7%
The OECD raised its forecast for South Korea’s economic growth this year to 3.7%, up 1.1%p from its June projection. This was the largest upward revision among G20 economies, reflecting stronger exports and production, particularly in semiconductors. The forecast exceeds those of the Bank of Korea (3.3%), the Korea Development Institute (KDI, 3.2%), and the government (3.0%). The Asian Development Bank (ADB) also raised its growth forecast for South Korea to 3.2%, up 0.6%p from July, citing strong semiconductor performance. The OECD also raised its global growth forecast by 0.1%p to 2.9%, reflecting increased AI-related investment, production, and trade. However, it also raised its forecast for South Korea’s consumer price inflation by 0.4%p to 3.0%. The Ministry of Finance and Economy attributed the higher inflation forecast to the higher growth outlook and rising international energy prices. The OECD also recommended the use of monetary policy to stabilize inflation expectations as well as targeted, temporary energy support measures.
23rd
Births Rise 14.7% Between January and July, the Highest Growth Rate on Record
Births Rise 14.7% Between January and July, the Highest Growth Rate on Record
The number of births in South Korea totaled 170,079 from January to July this year, up 14.7% from the same period last year, marking the highest growth rate on record for that period. Births in July reached 24,275, an 11.1% increase year on year and the highest July total in seven years. The total fertility rate (TFR) for July was 0.89. The rise in births has raised hopes that the annual TFR could return to the 0.9 range for the first time in seven years, although the Ministry of Data and Statistics said it would need to monitor the trend through the end of the year. Marriages, a leading indicator of future births, also increased 9.3% year on year in July, marking 28 consecutive months of growth. Factors cited behind the rise in births include an increase in the number of people of marriageable age and changing attitudes toward marriage and childbirth.
23rd
South Korea Aims to Cut Dependence on Middle Eastern Crude Oil to 50% or Less by 2035
The Korean government finalized its First Basic Plan for Resource Security, setting a target of reducing dependence on any single region for crude oil to no more than 50% by 2035. To reduce the share of crude oil imports sourced from the Middle East, which accounted for 71.3% of the total last year, the government plans to expand long-term supply contracts and support investment in refining facilities needed to process U.S. light crude. It also aims to diversify natural gas supply sources by reducing dependence on any single country to no more than 30%. To strengthen its capacity to secure crude oil, the government plans add storage capacity for 20 million barrels by 2030. In response to demand from advanced industries such as semiconductors and batteries, the number of designated critical minerals will increase from 38 to 51, while the number of minerals held in reserve will rise from 24 to 29. Stockpiling targets for minerals with vulnerable supply chains will also be extended from 180 days to as many as 365 days.