This week brings key indicators that will shed light on recent trends in Korea's real economy. Amid mounting inflation concerns stemming from Middle East geopolitical risks, the United States, Japan, the eurozone and the United Kingdom are all set to make policy rate decisions.
First, Statistics Korea will release the "March Industrial Activity Trends" report on the 30th. The data will reveal how the domestic real economy has fared since the outbreak of the Middle East war. In February, industrial production surged 2.5% — the largest gain in five years and eight months — on the back of strong semiconductor demand, while facility investment jumped 13.5%, the biggest increase in more than 11 years. Consumption remained flat. Attention is now focused on how industrial activity in March fared with the Middle East situation factored in.
On the same day, the Ministry of Economy and Finance will announce March national tax revenue figures. Corporate tax payments from companies with December fiscal year-ends are expected to be reflected in the tally. National tax revenue is estimated to have risen significantly on the back of the semiconductor super-cycle.
Overseas, attention will center on policy rate decisions by major economies. The U.S. Federal Reserve will hold its third Federal Open Market Committee (FOMC) meeting of the year on the 28th and 29th (local time). It will be the last meeting chaired by Chair Jerome Powell before his term expires next month. Markets expect the Fed to hold rates steady at the current 3.5–3.75% for a third consecutive meeting. Following the rate announcement, the market's focus will be on Powell's assessment of inflation during his press conference.
The Bank of Japan (BOJ) will also decide on rates on the 28th. Although the yen has weakened since the outbreak of the Iran war, the market expects the BOJ to hold rates at 0.75% for a third straight meeting as it monitors the situation. The European Central Bank (ECB) and the Bank of England (BOE) will also announce rate decisions on the 30th. Markets are leaning toward holds across the board.
With U.S.-Iran ceasefire negotiations remaining deadlocked, U.S. economic data could also sway markets. An advance estimate of first-quarter GDP growth and March personal consumption expenditures (PCE) data are due. First-quarter earnings from Magnificent 7 (M7) big tech firms including Meta, Apple, Microsoft and Alphabet are also scheduled. For the M7, weak earnings relative to massive capital expenditures could dampen investor sentiment.
