South Korea became the first major Asian economy to raise interest rates Thursday, with more hikes in the pipeline as its central bank indicated that financial risks pose a bigger threat to the economy than the latest virus outbreak, Bloomberg News reported. Governor Lee Ju-yeol said the quarter-percentage-point hike to 0.75% still left rates in an accommodative position that supports the economy. He added that the current delta wave is having less of a negative impact on growth as consumers adjusted behavior to the new normal of the pandemic.
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South Korea’s ballooning household debt set new records last quarter, offering support for views that the central bank will raise interest rates as early as this week to deflate a debt bubble, Bloomberg News reported. Total credit extended to households jumped 10.3% from a year earlier to 1,806 trillion won ($1.54 trillion), according to a Bank of Korea statement on Tuesday. The 169 trillion won increase marked the largest gain since data going back to 2003. From the previous three months, credit rose by 41.2 trillion won, the biggest increase for an April-June quarter.
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South Korea's consumer inflation accelerated in July, staying at a nine-year peak marked in May, as hot weather conditions lifted prices of fresh food, while oil products and housing rental and other services costs continued rising, Reuters reported. The consumer price index (CPI) last month rose 2.6% year-on-year, Statistics Korea data showed on Tuesday, accelerating from a 2.4% increase in June and beating a 2.4% increase tipped in a Reuters survey.
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South Korea has recouped 69.7 percent of the public funds it spent to bail out troubled financial firms since the 1997-1998 Asian financial crisis, the financial regulator said Monday, the Yonhap News Agency reported. The country retrieved 327.9 billion won (US$284.3 million) in the second quarter out of the 168.7 trillion won in state funds spent to save firms from bankruptcy, according to the Financial Services Commission (FSC). The recovery rate was up from 69.5 percent recorded at the end of March, it added.
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The daughter of former Seoul Mayor Park Won-soon said her father left behind mountains of debt because he gave away the family fortune to various organizations, including women's groups, before he died last year, UPI reported. Jung Chul-seung, the family's legal counsel, said that the statement from the woman, who remains unidentified, was part of a recent conversation, Dong-A Ilbo and Asia Business reported.
Bank of Korea Governor Lee Ju-yeol said the central bank will discuss raising its key interest rate from its next meeting in August after playing down the likelihood that the latest virus surge will dent the economy’s recovery, Bloomberg News reported. While the bank left rates unchanged at 0.5% at its policy meeting on Thursday, a call for a quarter percentage point hike from one member helped send Korea bond futures plunging and strengthened the won as investors boosted their hawkish bets for the BOK to move early.
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SsangYong Motor's painful restructuring plan is raising the possibility that the ailing South Korean vehicle manufacturer may woo potential investors, the Korea Times reported. Early this month, its union and management reached an agreement to apply cost-cutting measures such as initiating unpaid leave and additional wage cuts for executive-level employees.
South Korea exports logged their sharpest expansion in 32 years in May, marking another robust month of shipments fuelled by stronger consumer demand globally as many economies start to reopen, Reuters reported. Surging chip and car shipments helped power a 45.6% surge in South Korea's exports from a year earlier, government data showed on Tuesday, posting the fastest growth since August 1988 and extending their expansion to a seventh month in a row.
Israel will sign a free trade agreement with South Korea this week, marking the first such arrangement with an Asian market, Israel's economy ministry said on Sunday, Reuters reported. The deal is meant to bolster bilateral trade by cutting out customs duties and offering safety nets on investments. Bilateral trade reached about $2.4 billion in 2020, about two thirds of it goods and services imported into Israel, the ministry said. The deal will be signed this week in Seoul during a visit by Israel's foreign affairs and economy ministers.
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World shares advanced Thursday ahead of the release of U.S. economic growth data and following a speech by President Joe Biden outlining ambitious plans for beefing up early education and other family oriented policies, the Associated Press reported. London’s FTSE 100 jumped 0.7% to 7,013.40. In Paris, the CAC40 climbed 0.6% to 6,344.17. Germany’s DAX slipped 0.2% to 15,262.39 as a report showed weakening consumer confidence. The future for the Dow industrials rose 0.4% and that for the S&P 500 surged 0.6%. U.S.