Korea's industrial production growth rebounded in December, indicating robust export growth. President Lee has signaled a potential supplementary budget to support various sectors, which could pose upside risks to Korea's growth. The KRW has appreciated against the USD this week, reflecting positive sentiment, note Lin Li, Asian Head of Global Markets Research and Khang Sek Lee, Research Associate at MUFG Bank.

Focus on supplementary budget potential

"Separately, President Lee continued to release signal that a supplementary budget may be introduced this year, in part to support culture and arts sector and new startup incubation initiative."

"While it is unclear whether it will ultimately be funded by KTB issuance or increased in tax revenues, it certainly poses some upside risk to Korea’s growth and justifying BoK’s recent pivot to neutral stance."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)