Korean Economy Faces K-Shaped Recovery Amid Sectoral Disparities

The Korean economy is experiencing a K-shaped recovery, according to a report by ANZ Research economist Sanjay Mathur. According to Jin10, Mathur highlights the disparities within the manufacturing sector, between industries, and in household income and expenditure. The widening gap between semiconductor exports and other product exports underscores the divide between large corporations and small to medium-sized enterprises. Weak construction activity is dragging down GDP growth, with the residential sector particularly sluggish due to tighter macroprudential policies. Mathur notes that the wage and sales growth of the highest income quintile is outpacing that of the lowest two quintiles. ANZ suggests that resolving these imbalances is more related to global demand and fiscal factors rather than monetary policy, although the Bank of Korea may prefer to offer targeted support. The bank adds that overall, the K-shaped recovery is unlikely to hinder policy tightening.