Bank of Korea (BOK) Governor Rhee Chang-yong forecasted a 1.4 percent economic growth for the year, excluding the information technology (IT) sector. He emphasized that the IT sector’s performance, driven by a global semiconductor upcycle, is crucial for growth prospects.
In November, BOK’s outlook predicted a 1.8 percent economic growth for 2026, showing an improvement from the previous year’s projection of 1 percent expansion. Rhee highlighted concerns about widening disparities in recovery rates among different sectors, calling for sustained structural reforms to ensure a more balanced economic recovery.
Rhee expressed unease about the won’s recent strength against the U.S. dollar, suggesting that the currency’s current valuation is not in line with economic fundamentals. He cautioned that a stronger won could lead to inflationary pressures and disadvantage domestic companies, potentially exacerbating economic inequalities.
The governor attributed the won’s strength to increased overseas securities investments by local investors, leading to short-term supply-demand imbalances in the foreign exchange market. He stressed the importance of a comprehensive assessment of this trend’s impact on economic growth and the need for reforms in domestic capital market institutions to address currency weaknesses.
Rhee emphasized the necessity of enhancing domestic industries’ competitiveness and promoting investment through capital market reforms to counteract the local currency’s vulnerabilities in the long run.
