Ministry of Finance and Economy

On August 19, Deputy Prime Minister and Minister of Finance and Economy Koo Yun Cheol attended a meeting hosted by the American Chamber of Commerce in Korea (AMCHAM Korea) at the Grand Hyatt Seoul. During the meeting, he outlined the Korean government’s economic policy direction and listened to the views of AMCHAM member companies.   The meeting was arranged to follow up on “AMCHAM Special Report: Korea’s Financial Hub Agenda,” which AMCHAM Korea presented in April.   In his opening remarks, Deputy Prime Minister Koo outlined Korea’s economic vision, progress in capital market reforms, and the direction of the country’s AI transformation.   First, Deputy Prime Minister Koo noted that Korea’s economic growth is expected to accelerate this year, with real GDP growth projected at 3 percent, the highest in five years, and per capita income is increasingly likely to reach USD 40,000. He then introduced the “3·4·5 Vision,” which aims to achieve a potential growth rate of 3 percent, position Korea among the world’s top four exporters, and raise per capita income to USD 50,000, along with three mega-projects in semiconductors, AI data centers, and physical AI to support these goals.   Deputy Prime Minister Koo then emphasized that the government is positioning the capital market as a key platform for growth and reforming the institutional framework in line with global standards. He highlighted key measures, including amendments to the Commercial Act to extend directors’ fiduciary duties to shareholders and Korea’s phased inclusion in the World Government Bond Index (WGBI), which began in April 2026. On FX, he stated that, following the announcement of the Roadmap for KRW Internationalization in July and the transition to 24-hour FX market operations on July 6, 2026, the government plans to officially launch an offshore KRW settlement system in January next year and substantially ease FX regulations.   In particular, reflecting recommendations made by AMCHAM Korea in its April report, Deputy Prime Minister Koo announced that the reporting threshold for foreign currency borrowing and the cash pooling limit for foreign bank branches will be raised from USD 50 million to at least USD 100 million.   He also noted that Korea’s strengths would be most evident in the era of physical AI, pointing to cooperation agreements worth USD 950 billion reached between Korean companies and major U.S. technology companies at the recent San Francisco AI Summit as “clear evidence of Korea’s potential to emerge as a key hub in the global AI supply chain.”   Following the opening remarks, a discussion moderated by AMCHAM Korea Chairman James Kim covered a wide range of topics, including key tasks and medium- to long-term growth strategies for achieving the “3·4·5 Vision,” strategies to position Korea as a global AI hub, and measures to enhance financial market accessibility. In the area of AI, participants also explored ways to strengthen cooperation between the government and AMCHAM Korea’s recently launched AI Leadership Council.   The implementation of the USD 350 billion Korea-U.S. strategic investment initiative was also a key item on the agenda. Deputy Prime Minister Koo noted that, with the Korea-U.S. Strategic Investment Corporation (KUIC) officially launched in June, the institutional framework for implementing the investment initiative is now in place. He stressed the importance of the private sectors of both countries working together to identify commercially viable and mutually beneficial projects, and expressed his hope that AMCHAM Korea would serve as a bridge between the Korean and U.S. governments in this process.   Deputy Prime Minister Koo said, “The Korean government views AMCHAM member companies not as foreign companies, but as members of the Korean economy,” noting that their investment and job creation over more than 70 years have become an integral part of Korea’s economy. He encouraged AMCHAM members to continue and expand their investment in Korea, provide policy recommendations based on their on-the-ground experience, and help convey Korea’s ongoing transformation to global investors.   In closing, Deputy Prime Minister Koo added that the government would closely consult with relevant ministries on the views raised at the meeting and actively incorporate them into future policy improvements where appropriate.   Please refer to the attached files. 

On August 14, Second Vice Minister of Finance and Economy Huh Chang held a joint meeting of the Foreign Exchange (FX) Soundness Council and the Task Force (TF) for Korea’s Inclusion in the MSCI Developed Markets Index at the Korea Federation of Banks in Seoul.   The meeting brought together officials from the Ministry of Finance and Economy (MOFE), Financial Services Commission (FSC), Bank of Korea (BOK), Financial Supervisory Service (FSS), Korea Exchange (KRX), and Korea Securities Depository (KSD) to review progress in implementing the Roadmap for FX and Capital Market Reform for Korea’s Inclusion in the MSCI Developed Markets Index, announced in January, and discuss further implementation plans. To date, 30 of the 39 measures (77%) across the roadmap’s eight key areas have been completed. The relevant authorities agreed to implement three additional measures by the end of this year.   At the meeting, participants held in-depth discussions on follow-up measures to enhance transaction and settlement convenience for foreign investors. These included: (i) the distribution of e-FX* guidelines to facilitate 24-hour FX trading; (ii) measures to improve the settlement facilitation funding scheme to ease KRW liquidity burdens associated with securities settlement; and (iii) plans for the BOK to establish a 24-hour settlement system that would enable foreign financial institutions to hold, transfer, and settle KRW overseas.   * FX transactions conducted through electronic means, including the electronic provision of price information and the use of automated order-matching functions.   In addition, participants agreed to continue monitoring the smooth functioning of the reforms in the market and progress in addressing issues raised by investors through consultations with key global investors and other channels. They also agreed to share any newly identified challenges with relevant authorities through the MSCI Task Force and formulate and implement necessary follow-up measures.     Participants then reviewed trading developments in the FX market, which has been operating 24 hours a day since July 6. Since the launch of 24-hour FX trading, market infrastructure has operated smoothly without any disruptions, including failed transactions, while the Korean won has remained relatively stable against the U.S. dollar compared with other major currencies. Participants also noted that trading volume has increased from levels recorded prior to the introduction of 24-hour trading.* However, they assessed that late-night trading activity has been increasing only gradually, reflecting the early stage of 24-hour trading and time differences with overseas markets, among other factors. The relevant authorities therefore agreed to assign additional weight** to late-night trading volume in the selection of leading banks*** in the KRW/USD market, thereby strengthening incentives for domestic banks to trade during late-night hours. * Average daily spot trading volume in the interbank market: USD 17.39 billion (H1 2026) → USD 19.14 billion (since the extension of trading hours), up 10.1%. ** Example weights: 1x (06:00-18:00), 2x (18:00-22:00), 3x (22:00-06:00 the following day). *** Introduced in 2022, the program selects domestic banks that have contributed to promoting KRW/USD trading on an annual basis and provides them with incentives, including reductions in the Macroprudential Stability Levy.   Lastly, participants discussed the impact of the sharp rise in domestic stock prices on Korea’s external soundness indicators. Second Vice Minister Huh noted that, with the KOSPI rising 68 percent from 5,052 at the end of the first quarter to 8,476 at the end of the second quarter, Korea’s net international investment position (NIIP) is expected to decline significantly in the second quarter. He emphasized, however, that this does not indicate any deterioration in Korea’s external soundness. Participants also agreed that the decline in the NIIP is not attributable to weaker economic fundamentals, such as a current account deficit or increased external borrowing, but is largely driven by an increase in the value of domestic equities held by foreign investors, reflecting stronger fundamentals, including improved corporate performance.   The relevant authorities will continue to closely monitor the composition of Korea’s external assets and liabilities, as well as indicators of its external payment capacity, while actively communicating with market participants to prevent unnecessary misunderstandings. Please refer to the attached files. 

In June 2026, total industrial production, retail sales and facility investment increased.   Output increased in the industrial sector (+6.4% m-o-m, +5.8% y-o-y), services (+0.7%, +5.3%) and construction (+4.1%, -4.0%), resulting in an increase in total industrial production (+2.3%, +4.2%).   Facility investment moved up (+5.8% m-o-m, +21.7% y-o-y), while retail sales also increased (+2.7%, +4.2%).   Exports in July 2026 climbed by 62.8 percent year-on-year, supported by strong exports of semiconductors, computers, and ships. Average daily exports rose by 69.6 percent in July compared to the same month of last year.   The consumer sentiment index (CSI) rose by 0.2 points month-on-month to 106.8 in July. The composite business sentiment index (CBSI) went up by 0.8 points to 98.5 and the CBSI outlook for August increased by 1.3 points to 96.5.   The cyclical indicator of the coincident composite index for June rose by 0.5 points and the cyclical indicator of the leading composite index increased by 0.9 points.   In July, employment growth accelerated, while consumer price growth slowed from the previous month.   The number of employed persons grew by 108,000 from a year earlier, while the unemployment rate increased by 0.2 percentage points to 2.6 percent.   The consumer price index (CPI) climbed by 2.8 percent year-on-year (3.2% in June → 2.8% in July), while the index excluding food and energy rose by 2.6 percent, the index excluding agricultural products and petroleum products rose by 2.5 percent, and the CPI for living necessities increased by 2.5 percent.   In July, stock prices fell, Korean Treasury Bond yields rose, and the Korean won strengthened against the U.S. dollar.   In June, both housing prices (+0.33% m-o-m) and Jeonse[1] prices (+0.38% m-o-m) continued to climb.   The Korean economy has recently shown stronger signs of recovery, with exports increasing sharply and domestic demand, including consumption, continuing to improve.   However, amid persistent uncertainty stemming from the conflict in the Middle East, pressures on livelihoods remain, including inflationary pressures from high oil prices and challenging employment conditions for vulnerable groups and sectors.   The global economy continues to grow at a moderate pace, but uncertainties surrounding the conflict in the Middle East and U.S. tariff measures persist.   The government will make every effort to minimize the impact of the Middle East conflict by ensuring stable supplies of key items, maintaining price stability and supporting people’s livelihoods, while swiftly implementing the Economic Growth Strategy for the Second Half of 2026 to address structural challenges, including a post-conflict strategy, measures to boost potential growth and efforts to address economic polarization. [1] lump-sum deposits with no monthly payments       Key Statistics Employment   2025 2026 Annual Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Number of employed  (million) 28.77 29.03 28.97 29.15 29.04 29.05 28.21 27.99 28.41 28.79 28.96 29.16 29.15 29.14 Employment rate  (%) 62.9 63.4 63.3 63.7 63.4 63.4 61.5 61.0 61.8 62.7 63.0 63.3 63.4 63.3 (Seasonally adjusted)  62.9 62.8 62.8 63.1 62.9 62.9 62.7 62.8 63.0 63.0 62.7 62.5 62.6 62.7 Consumer Price Index                                                                                          (%) l                                                                                                   2025                                           2026 Mar  Apr    May  Jun  Jul  Aug  Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul y-o-y 2.1 2.1 1.9 2.2 2.1 1.7 2.1 2.4 2.4 2.3 2.0 2.0 2.2 2.6 3.1 3.2 2.8 m-o-m 0.2 0.1 -0.1 0.0 0.2 -0.1 0.5 0.3 -0.2 0.3 0.4 0.3 0.3 0.5 0.5 0.1 -0.2   Retail Sales (Percentage change from the previous period, %)     2024                                                        2025                                             2026 Annual Q1 Q2 Q3  Q4  Annual Q1 Q2  Q3  Q4       Q1        Q2¹           Apr      May¹      Jun¹ Retail sales -1.9 -1.2 -0.7 0.4 -0.6 0.3 0.6 -0.6 1.2 0.6 2.4 -1.7 -3.7 0.1 2.7 (y-o-y) - -1.5 -3.0 -1.4  -1.8 - -0.8 -0.1 1.6 0.9 3.2 2.4 1.4 1.5 4.2 1. Preliminary Facility Investment Index (Percentage change from the previous period, %)                                                                  2024                                           2025                                     2026 Annual Q1 Q2 Q3 Q4    Annual        Q1       Q2       Q3        Q4      Q1      Q2¹     May¹     Jun¹ Facility investment index 3.0 -3.0 0.4 6.0 1.8       1.2 -2.2 0.3 0.6 -3.8 13.0 3.6 0.3 5.8 (y-o-y) - -1.5 -3.4 11.4 5.6     - 5.4 5.5 1.2 -6.2 9.8 13.0 9.7 21.7 1. Preliminary    Construction Completed  (Percentage change from the previous period, %)                                           2024                                            2025                                         2026   Annual      Q1 Q2 Q3 Q4    Annual       Q1       Q2      Q3      Q4  Q1       Q2¹ May¹  Jun¹ Construction Completed (Constant) -4.6 4.5 -5.5 -4.6 -4.6     -16.5 -7.2 -2.6 -0.8 -4.1 0.5 0.4 3.7 4.1 (y-o-y) - 4.1 -3.1 -9.9 -9.5       - -21.1 -17.3 -11.9 -15.1 -6.1 -4.6 -3.2 -4.0 1. Preliminary Exports and Imports  (US$ billion, y-o-y, %)   2024 2025                                           2026 Annual  Annual  Q1   Q2   Q3 Q4 Jan Feb Mar Apr May Jun Jul Exports 683.61 709.33 159.53 175.13 184.89 189.78 65.85 67.65 87.34 85.74 87.61 102.17 98.89 (y-o-y, %) 8.1 3.8 -2.3 2.1 6.5 8.4 33.9 29.4 50.4 47.7 53.0 70.7 62.8 Average daily exports 2.53 2.64 2.49 2.63 2.59 2.85 2.80 3.56 3.80 3.57 4.27 4.54 4.12 Imports 631.77 631.90 152.84 154.40 162.49 162.16 57.12 51.93 60.68 62.09 60.76 66.08 68.56 (y-o-y, %) -1.6 -0.0 -1.3 -1.8 1.5 1.4 11.6 7.5 13.8 16.6 20.7 30.0 26.5 Average daily imports 2.34 2.35 2.39 2.32 2.27 2.44 2.43 2.73 2.64 2.59 2.96 2.94 2.86 Industrial Production (Mining, Manufacturing, Electricity and Gas Production)                 (Percentage change from the previous period, %)  2024                                              2025                2026 Annual Q2 Q3 Q4     Annual Q1 Q2 Q3      Q4 Q1 Q2¹ Jun¹ Industrial Production2 m-o-m, q-o-q - 1.7 -0.1 1.9 - 0.7 1.0 1.5 -3.4 2.7 1.4 6.4 y-o-y 4.1 5.0 2.4 3.8 2.8 2.9 3.1 7.8 -2.0 2.7 2.0 5.8 Manufacturing Production m-o-m, q-o-q - 1.8 -0.3 2.2 - 0.8 0.9 1.4 -3.3 3.0 1.3 6.8 y-o-y 4.3 5.1 2.2 4.1 3.0 2.8 3.5 8.1 -1.9 3.0 2.1 6.1 Shipments (m-o-m, q-o-q) - 0.9 -0.2 0.9 - 0.0 1.1 0.4 -2.0 2.2 -0.4 8.4 Inventory3 (m-o-m, q-o-q) - -1.0 -0.1 -0.8 - -3.0 -1.9 0.8 0.4 -0.5 3.2 0.1 Production capacity (y-o-y) 0.8 1.0 0.6 1.0 2.3 2.0 2.5 2.9 1.8 0.9 0.7 0.4 Average operation ratio4 72.6 73.3 72.1 72.5 72.6 72.9 72.9 73.1 71.4 73.3 73.0 74.9   1. Preliminary   2. Mining, Manufacturing, Electricity and Gas Production   3. End-point (month, quarter, and year)   4. Average operation ratio for the month (or quarter)    Service Output            (Percentage change from the previous period, %)                                                  2024                                                 2025                                                   2026  Annual  Q1 Q2 Q3 Q4    Annual Q1 Q2 Q3 Q4 Q1 Q2¹ Apr May¹ Jun¹ Service output 1.1  0.3 0.0      -0.2       1.1       2.0 0.3  0.4 0.7 1.2 1.4 1.2 -0.8 1.0 0.7     1. Preliminary Composite Indices of Coincident and Leading Indicators                                                                                            (Points)    2025                                                              2026 Aug Sep Oct Nov Dec Jan Feb Mar Apr¹ May¹ Jun¹ Cyclical indicator of coincident composite index 99.8 99.8 99.4 99.2 99.0 99.0 99.6 100.0 100.2 99.8 100.3 m-o-m (points) 0.2 0.0 -0.4 -0.2 -0.2 0.0 0.6 0.4 0.2 -0.4 0.5 Cyclical indicator of leading composite index 100.9 100.9 100.9 101.1 101.6 102.2 102.8 103.5 104.1 104.8 105.7 m-o-m (points) 0.4 0.0 0.0 0.2 0.5 0.6 0.6 0.7 0.6 0.7 0.9 1. Preliminary   Please refer to the attached files.