Korea – two puzzles

My latest video, discussing two of the issues that puzzle me about Korea: the weakness of the KRW despite surging export growth, and the strength of inflation despite GDP growth – until today – being well below potential.

Paul Cavey

Apr 23, 2026 • 1 min read

Regular readers will know that I continue to expect the KRW to appreciate. On inflation, subscribers can read the detailed note investigating the issue here:

Korea macro charts

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East Asia Today

Taiwan's export orders and IP in March were strong. Exports in Korea's Q1 GDP likewise show the continued strength of the semiconductor cycle, and Japan's April manufacturing PMI also rose. By contrast, domestic demand and consumer indicators across the region are weaker.

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Korea – inflation, and higher growth

Today's consumer confidence survey warns of higher inflation but slower growth. That is the BOK's base case, and if growth does slow, then there is a reason to look through inflation. But today's Q1 GDP data show much higher growth, boosted by a semi cycle that isn't yet ending.

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East Asia Today

Japan's trade data for March show some of the trends seen elsewhere in the region: strong semiconductor sales, and as yet, no big rise in energy imports. In Korea, goods PPI signals further rises in goods CPI, and the BOK's loan officer survey warns of a rebound in lending to the household sector.