The near-term economic outlook for Korea is very poor, with falling real incomes, problems in the housing market, and weak global demand all set to weigh on prospects this year. Our forecast is that the economy will grow by a below-consensus and below-trend 0.5% in 2023. If we are correct, then the central bank will quickly turn its attention to supporting demand. We expect the Bank of Korea to start cutting interest rates in August, much sooner than others are forecasting.
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