The latest activity data for Korea were downbeat and support our view that the economy is set to weaken in the second quarter. Meanwhile, house prices fell further in May and are now down about 10% from their recent peak in 2022. A prolonged downturn in the property sector remains a key source of financial risks given elevated private sector debt ratios in Korea. We continue to expect the weak economy, falling inflation and concerns about financial instability to prompt the central bank to embark on rate cuts in the coming months.
We are publishing this Weekly one day earlier than usual because the Singapore office is closed for Vesak Day on Friday, 2nd June 2023.
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