Bank of Korea Governor Rhee Chang-yong cautioned about the persistence of economic polarisation and uncertainty in the upcoming year. He emphasized the necessity for cautious and well-balanced policymaking during a meeting in Seoul with financial company leaders and industry officials. Rhee highlighted the likelihood of a ‘K-shaped’ recovery with significant disparities among sectors, potentially leading to a disconnect between headline growth figures and public economic perception.
Uncertainties in the global trade environment and fiscal policies of major economies were identified as key challenges by Rhee. He also mentioned the need to reassess expectations for the global artificial intelligence (AI) industry. The central bank intends to adopt a more nuanced approach to monetary policy, closely monitoring various economic indicators due to heightened uncertainty that is affecting trade-offs among crucial policy variables like economic growth, inflation, and financial stability.
The Bank of Korea’s latest forecast predicts a 1.8 percent growth for the local economy in 2026, showing an acceleration from the previous year’s projected 1 percent expansion. Finance Minister Koo Yun-cheol outlined the government’s commitment to fostering balanced growth through initiatives such as a 150 trillion-won (US$103 billion) public growth fund and tax incentives for investors in the domestic capital market. Koo emphasized the importance of finance in driving the South Korean economy towards significant progress and overcoming economic disparities.
