Korea’s Q1 Surprise Growth Lifts Forecasts, but Potential Growth Seen Sliding to 1% Range

  Global investment banks are raising their outlooks for South Korea’s growth after a surprise first-quarter expansion. Economists, however, are warning that the rebound may be short-lived as the economy’s underlying capacity continues to weaken, with potential growth projected to slip into the mid-1% range next year.

Analysts said the strong reading could reflect a temporary bounce. They pointed to base effects from last year’s unusually weak growth, combined with a semiconductor upturn and currency-related factors.

The longer-term trend remains softer. The Organization for Economic Cooperation and Development projects South Korea’s potential growth rate will fall to 1.71% this year from 1.92% last year, a decline of 0.21 percentage points, and ease further to 1.57% next year.
  “Auto China 2026,” running through May 3, highlighted Chinese brands rolling out AI-heavy smart cars as they seek to offset a sharp domestic slowdown. Held under the theme “Future of Intelligence,” the show drew global automakers including Hyundai Motor, Mercedes-Benz, BMW and Volkswagen Group, along with more than 100 local companies such as BYD, Geely, Chery, Xiaomi, Xpeng and Nio.

A Li Auto official said the government’s new energy vehicle strategy is shifting from rapid expansion to higher-quality growth, intensifying competition among local firms. With AI integrated into vehicles, the official said, autonomous driving and infotainment features have advanced, and charging and operating systems have improved. “A 1,500-kilometer driving range has become the standard, and the 2,500-kilometer era will open soon,” the official said.

Against China’s fast-rising automakers, Hyundai Motor is betting on its electric “Ioniq V.” The model is the production version of the previously unveiled “Venus” concept car and the first China-focused strategic model under Hyundai’s Ioniq brand. Hyundai Motor Group Vice Chairman Jang Jae-hoon said, “We will learn a lot and grow in China,” adding, “It is the toughest market, but we will rise again in China and create success.”
  South Korea’s five major financial holding companies — KB, Shinhan, Hana, Woori and NH NongHyup — posted a combined net profit of more than 6 trillion won in the first quarter, a record, as performance differences widened in noninterest income and nonbank businesses. A strong stock market lifted trading value, and results varied depending on each group’s securities unit.

The financial industry said the five groups’ combined first-quarter net profit totaled 6.1976 trillion won, up 9.8% from 5.6430 trillion won a year earlier. It was the first time their combined first-quarter profit exceeded 6 trillion won.

Nonbank units, especially brokerages, were the biggest swing factor as securities firms emerged as a key earnings pillar during the market rally.

KB Securities posted 3,478 billion won in first-quarter net profit, up 93.3% from a year earlier, as stock trading fees and proprietary trading both grew. Shinhan Investment Corp. reported 2,884 billion won, up 167.4%. NH Investment & Securities posted 4,757 billion won, up 128.5%.
  A historic stock rally, including a 70% jump in the KOSPI last year, sharply increased the value of shares held by underage investors, even as the number of shareholders and shares owned declined. The total value of minors’ holdings approached 3 trillion won on rising prices.
 
The Korea Securities Depository said that as of the end of last year, 728,344 minors (under age 20) held shares in 88 companies among the top 200 listed firms by market capitalization that disclose shareholder data by age. The value of their holdings was about 2.9761 trillion won.

Average minors per company fell to 8,277 from 8,466, and average shares held declined to about 370,000 from about 400,000. But average holding value jumped more than 72% to 33.8 billion won from 19.6 billion won, reflecting higher stock prices. By company, Samsung Electronics drew the largest number of minor shareholders.
U.S. President Donald Trump said on April 25 local time that a suspect in a shooting at the White House Correspondents’ Association dinner likely acted alone and that he did not believe the incident was connected to Iran.

According to AP and other outlets, Trump told a White House news conference that he initially thought the sound was “a tray falling.” “It was quite loud, and it was heard from quite far away,” he said.

Referring to suspect Cole Thomas Allen, 31, Trump said, “They (investigators) seem to think it was a lone act. I think so, too.” He added, “He is someone with very serious mental problems,” and said authorities searched the suspect’s apartment.

On a possible Iran link, Trump said, “I don’t think so,” while adding, “But you never know. We will learn a lot” through the investigation.
  Seoul’s apartment jeonse supply-demand index, which tracks the balance between demand and supply for the lump-sum deposit lease system, rose to its highest level since June 2021. A reading above 100 indicates demand exceeds supply, nearing levels seen during the 2021 surge in jeonse prices.

The Korea Real Estate Board said the index for the third week of April (as of April 20) came in at 108.4, up 3.2 points from 105.2 the previous week. The increase was larger than the prior week’s 0.7-point rise.

It was the highest since the fourth week of June 2021 (as of June 28), when the index stood at 110.6. The index scores demand and supply around a baseline of 100; readings closer to 200 indicate far more renters seeking jeonse than landlords offering it, while readings closer to 0 indicate the opposite.

In September 2021, the index rose as high as 109.1 during what was widely described as a jeonse crunch. The Seoul index moved above 100 starting in the third week of May last year (100.2) and has continued rising since the spring moving season began in March.
 



* This article has been translated by AI.

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