Korea – domestic weakness to offset export strength

We expect Korea to record another year of subdued growth in 2026, as relatively strong exports are likely to be offset by soft domestic demand. Trump’s latest threat to impose 25% tariffs poses a downside risk to the outlook, although it remains unclear whether these measures will actually be implemented. Persistently weak growth should eventually prompt the Bank of Korea to come off the sidelines and resume its easing cycle, most likely in the second half of the year.