There's been enough data on Korea already this week, so just briefly on today's end-of-month July data. There was a nice bounce in retail sales, reflecting the impact of fiscal policy. But IP was flat, and construction ticked down, so all economy output remains range-bound.

The BOK didn't change rates today. It did note signs of cycle improvement, a sense reinforced by separate labour market data reported today. But it only raised its GDP forecast by 0.1ppt, one member voted for a cut, and the governor said the easing stance was likely to persist through 1H26.

Slightly in advance of the BOK meeting tomorrow, a review of the economy and policy. My base case is the bank ends up cutting below 2%, because cycle stabilisation is tentative, and structural downside risks loom large. In monitoring that, my key indicators are business sentiment and services CPI.

Business sentiment in today's BOK survey for August improved again. The DI also rose, suggesting the bounce is not yet completed. Some of the details were encouraging, but the sharp rise in confidence in the accommodation sector warns the overall rise is vulnerable to the ending of fiscal handouts.

Consumer confidence eked out another increase in August. But both inflation and house price expectations also rose. The BOK has been expecting higher food prices, so that isn't unexpected. However, the bank would have wanted to see more of a cooling of the property market by now.

20-day exports for August were a bit stronger than 10D, and recent signs of life in non-tech are persisting. PPI inflation in August was unchanged overall. Industrial goods prices look stable, though food prices are rising in August. Services PPI inflation is still much lower than services CPI.

I've done lots of work comparing China and Japan. Now, the BOK has done the same for Korea. There are clear similarities: demographics, debt, export-led development. It doesn't have deflation, but the scale of reforms the BOK recommends shows a Japanese-style slowdown is a real risk.

Preliminary data show the recent fall in import prices lost momentum in July, but still point to more downside for CPI goods prices in the next 3M. Overall export prices were flat, but for autos show the same sharp decline seen in Japan. Asian auto firms – so farm – are absorbing much of the tariffs

The rise in optimism that followed the election in early June of a new government isn't yet feeding into a meaningful improvement in labour market data. One of the missing ingredients is that the rise in confidence seen among consumers hasn't yet spread to the corporate sector.